InfoSAWIT, JAKARTA - Amid global price fluctuations and shifts in export market directions, Indonesia's palm oil industry is experiencing rapid growth in March 2025. Crude palm oil (CPO) production surged by 15.9% from the previous month, reaching 4.39 million tons, while palm kernel oil (PKO) production also rose to 417,000 tons. In total, the combined production of CPO and PKO hit 4.81 million tons—an undeniable monthly growth.
"This production increase is driven by improved weather conditions and the onset of a more optimal harvest season in several production centers," said Mukti Sardjono, Executive Director of the Indonesian Palm Oil Entrepreneurs Association (GAPKI), as quoted by InfoSAWIT in a monthly report on Saturday (May 31, 2025).
Domestic consumption has also risen, particularly fueled by the biodiesel and food sectors. Of the total domestic consumption of 2.15 million tons, approximately 1.07 million tons were used for biodiesel, up from 1 million tons in February. Food consumption also saw a significant increase, reaching 889,000 tons.
"Demand for biodiesel remains stable due to the support of the B35 policy. This demonstrates a strong commitment from both the government and the industry towards renewable energy," explained Mukti.
Not only is the domestic market thriving, but palm oil exports are also showing positive momentum. The total export volume in March 2025 reached 2.88 million tons, up from 2.8 million tons the previous month. A sharp increase was noted in processed PKO exports, which soared by 49%, along with other palm oil products and oleochemicals.
However, not all export destinations reported good news. Four major destination countries—China, India, Pakistan, and Bangladesh—recorded a decline in demand. Exports to India, for instance, fell nearly 30%, from 387,000 tons to just 271,000 tons.
"This decline is likely due to their still high domestic stock levels and tariff policy adjustments," said Mukti.
Conversely, countries in Europe and the United States are experiencing a surge in demand. Exports to the European Union increased from 298,000 tons to 343,000 tons, and to the U.S. skyrocketed from 153,000 tons to 249,000 tons—a rare increase in palm oil trade trends over the past few years.
"This indicates that Indonesian processed palm oil products remain competitive and are increasingly accepted in markets known for their stringent sustainability issues," Mukti stated.
In terms of value, exports in March reached USD 3.28 billion, or approximately IDR 54.1 trillion. This figure represents a 2.84% increase from February, driven by rising international CPO prices from USD 1,232 to USD 1,251 per ton (cif Rotterdam), as well as the strengthening of the U.S. dollar against the rupiah.
With the growing export trend and increasing domestic consumption, the end-of-month stock in March decreased to 2.036 million tons—a drop of 213,000 tons compared to the previous month.
"This stock reduction could signal positive prospects for domestic prices. It also indicates that supply is being well absorbed by both local and export markets," concluded Mukti.
The growth rate in March brings a breath of fresh air, but industry players remain vigilant. Global market volatility, protectionist policies, and negative sentiments towards palm oil still loom. However, for now, Indonesia's palm oil industry can breathe a sigh of relief—at least one full month has passed with a golden record. (T2)
