Age of cheap palm oil ends amid Indonesia’s biofuel push: ‘those days are gone’

Prices of cooking oil could be buoyed up for years by stagnating production and a biodiesel push in top producer Indonesia that are making traditionally cheap palm oil costlier, eliminating an advantage that also curbed prices of rival oils.

Used in everything from cakes and frying fats to cosmetics and cleaning products, palm oil makes up more than half of global vegetable oil shipments and is especially popular among consumers in emerging markets, led by India.

After decades of cheap palm oil, thanks to booming output and a battle for market share, output is slowing and Indonesia is using more to make biodiesel, respected industry analyst Dorab Mistry said.

“Those days of US$400-per-tonne discounts are gone,” added Mistry, a director of Indian consumer goods company Godrej International. “Palm oil won’t be that cheap again as long as Indonesia keeps prioritising biodiesel.”

Indonesia increased the mandatory mix of palm oil in biodiesel to 40 per cent this year, and is studying moving to 50 per cent in 2026, as well as a 3 per cent blend for jet fuel next year, as it seeks to curb fuel imports.