On the 8th of July 2022, the Indonesian government stated that it plans to implement a 35% palm oil mix in biodiesel (B35) by the end of July. Indonesia (top global palm oil producer and exporter) currently has a mandatory 30% palm oil mix in its biodiesel (B30). According to the government, this raise is intended to absorb the excess inventory accumulated on the back of the palm oil export ban implemented on the 28th of April. Since replacing the export ban with a Domestic Market Obligation (DMO) on the 23rd of May, Indonesia has struggled to reduce its high domestic palm oil inventories and has made several adjustments, such as the launch of an export acceleration scheme on the 7th of June to boost palm oil exports. Additionally, on the 1st of July, the government raised the palm oil export quota; allowing companies to export seven times the amount sold domestically (from five times). Despite these adjustments, domestic palm oil inventories remain high. According to market sources, farmers are still struggling to sell palm oil fruits.
The Mintec Benchmark Price (MBP) of Indonesian palm oil was assessed at USD 1,500/MT, down by 17.6% month-on-month (m-o-m) but remains up by 45.1% year-on-year (y-o-y) on the 7th of July. This has also had a knock-on effect on prices of alternative vegetable oils, with prices falling on improvements in palm oil supply.
