InfoSAWIT, NUSA DUA — Trade tensions in the global vegetable oil market are resurfacing, with Bloomberg commodity analyst Alvin Tai highlighting shifting dynamics among Indonesia, Malaysia, and the United States — developments that could reshape the outlook for Indonesia’s palm oil exports.
Alvin noted that Malaysia has moved far more swiftly in securing trade arrangements with the U.S., whereas Indonesia is still formulating its position and negotiating Washington’s demands.
According to Alvin, Malaysia has already signed a trade deal granting a 19% import duty and zero tariffs for major commodities including palm oil, cocoa, and rubber — giving Malaysian vegetable oils a cost advantage in the U.S. market. However, the agreement comes with major obligations.
“Malaysia must purchase US$150 billion worth of semiconductors, aerospace components and equipment, and data centers over five years,” he explained at the Indonesia Palm Oil Conference (IPOC) 2025 and Price Outlook 2026, attended by InfoSAWIT in mid-November 2025. Malaysia must also absorb US$204 billion worth of coal and allocate US$70 billion in venture capital investments.
While Malaysia advances, Indonesia remains stuck in early-stage negotiations. Under the framework released by the White House in July, Indonesia is asked to purchase US$15 billion in energy products per year, US$4.5 billion in agricultural goods, and 50 Boeing aircraft.
More sensitive demands include eliminating tariffs on 99% of U.S. food and agricultural products and relaxing non-tariff barriers.
According to Alvin, removing non-tariff measures poses the greatest risk: if U.S. corn enters Indonesia more freely, price disparities could shrink. “This would benefit the poultry industry but put pressure on local corn farmers, who currently sell at premiums up to 150% above international prices,” he said.
The impact is already visible. In 2024, Indonesia exported 1.54 million tons of palm oil to the U.S. worth US$1.59 billion. But in the first seven months of this year, exports plunged 25.8%. Malaysia, meanwhile, has filled the gap.
“Every shipment Indonesia loses, Malaysia steps in to replace,” Alvin said. Data shows Malaysian palm oil shipments to the U.S. in the first seven months of this year nearly matched total 2024 exports — indicating aggressive market capture.
This shift occurs as the U.S. faces a raw material shortage for biodiesel and renewable diesel production. Even though soybean crushing capacity is set to rise to 2.78 billion bushels by 2030, supply remains insufficient. Total feedstock demand is around 43 billion pounds versus available supplies of only 34.5 billion pounds.
“Logically, this should create major opportunities for palm oil,” Alvin noted. “But Indonesia risks losing that position if it cannot secure access to the U.S. market.” (T2)
