PALMOILMAGAZINE, JAKARTA – The Indonesian palm oil industry has long faced various challenges, ranging from low productivity, land ownership issues, to price fluctuations. In 2025, celebrated by the Chinese community as the Year of the Snake, which is associated with the wood element, the industry is poised for renewal and growth potential.
The Year of the Wood Snake is predicted to bring significant changes in various aspects of life. It presents a perfect opportunity for introspection, strategic planning, and tapping into latent potential. For the palm oil industry, it represents a pivotal moment to make breakthroughs, especially in the development of its downstream sector.
Despite the development of the national biodiesel program since 2015, starting with B5 and advancing to B40 in early 2025, the palm oil business has faced significant bottlenecks. The biodiesel program, while beneficial, has largely served a limited group of people who directly profit from it.
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From an economic perspective, the biodiesel program has increased the domestic demand for crude palm oil (CPO) used as feedstock for biofuels. This initial momentum in 2025 marks a new beginning for the CPO business, with increasing opportunities in bioenergy and biofuels.
This shift will influence CPO prices, especially when confronted with the year-end supply stocks, creating potential for increased demand in the early months of the year due to the national biodiesel program. As a result, CPO prices may remain stable or even rise, driven by the B40 program in 2025.
The adverse climate conditions throughout 2024 further impacted national CPO production, leading to limited supply from Indonesia, which, in turn, drove up international CPO prices. In January, CPO prices even surpassed soybean oil prices on the global vegetable oil market.
However, the high price of CPO inevitably affects other vegetable oil markets. As CPO becomes too expensive, global demand gradually decreases, ultimately finding a new price equilibrium.
According to the Indonesian Ministry of Trade, the reference price (HR) for CPO in January 2025 fell by 1.13% to US$1,059.54 per metric ton, compared to US$1,071.67 in December 2024. The drop in CPO prices has subsequently sparked renewed demand for Indonesian CPO in global markets.
The primary issue with fluctuating CPO prices lies in its utility in the importing countries. Most CPO export markets rely on it as an alternative raw material for their domestic vegetable oil industries. Despite having domestic supplies, these countries still need CPO as a vital input for their industries. (*)
Writer: Ignatius Ery Kurniawan, Editor-in-Chief
For the full article, read InfoSAWIT Magazine, February 2025 Edition.
