InfoSAWIT, JAKARTA – Indonesia's crude palm oil (CPO) and palm kernel oil (PKO) production rose sharply in June 2026, but stronger domestic consumption and exports outweighed the increase in output, resulting in lower national palm oil inventories.

According to data from the Indonesian Palm Oil Association (GAPKI), CPO production reached 4.823 million tonnes in June 2026, up 8.59% from 4.165 million tonnes in May.

PKO production also increased, rising from 387,000 tonnes in May to 449,000 tonnes in June.

With both commodities posting gains, Indonesia's combined CPO and PKO production reached 5.277 million tonnes in June, compared with 4.552 million tonnes in the previous month.

On a cumulative basis, Indonesia produced 30.284 million tonnes of palm oil during the January-June 2026 period, representing growth of 15.82% from 27.889 million tonnes recorded in the same period of 2025.

Domestic Palm Oil Consumption Continues to Rise

Higher production was accompanied by continued growth in domestic palm oil consumption.

Total domestic consumption reached 2.201 million tonnes in June 2026, an increase of 5.92% from 2.078 million tonnes in May.

Biodiesel remained the largest driver of domestic demand.

Palm oil consumption for biodiesel production reached 1.131 million tonnes in June, rising from 1.035 million tonnes in the previous month.

Palm oil use in the food sector also increased, climbing from 856,000 tonnes in May to 878,000 tonnes in June.

Meanwhile, consumption by the oleochemical industry rose from 187,000 tonnes to 192,000 tonnes over the same period.

For the first half of 2026, total domestic palm oil consumption reached 12.994 million tonnes, up 5.48% from 12.272 million tonnes recorded during the January-June period of 2025.

The continued expansion of biodiesel demand has further strengthened the role of Indonesia's domestic market as a major absorber of national palm oil production.

Higher Consumption and Exports Reduce Stocks

According to GAPKI, the increase in palm oil production in June was not sufficient to lift inventories because domestic consumption and exports of CPO and PKO grew at a faster pace.

As a result, Indonesia's palm oil stocks declined at the end of June.

The first-half figures point to continued growth across the country's palm oil industry, with production, domestic consumption and exports all showing positive momentum.

The strong performance of the biodiesel sector remains particularly significant, as rising biofuel demand continues to provide a major source of support for Indonesia's domestic palm oil market.

With biodiesel consumption surpassing 1.13 million tonnes in June alone, domestic demand is playing an increasingly important role in absorbing Indonesia's expanding palm oil output and shaping the balance between production, exports and national inventories. (T2)

Source: InfoSAWIT