Jakarta. Indonesia’s exports of palm oil had climbed by double digits again, as the industry braces for a higher biodiesel mandate that could bring about lower shipments without improvements to production.

Indonesian exports of crude palm oil (CPO) and its derivatives reached $4.69 billion in the first two months of 2026, according to the Central Statistics Agency (BPS). The exports saw a 26.40% hike from a value standpoint, compared to the $3.71 billion worth of shipments over the same period of 2025. Indonesia’s total palm oil exports rose 36.26% in volume. Roughly 3.33 million tons of palm oil left the country for foreign markets in January-February 2025 before rising to 4.54 million tons the following year.

“The palm oil exports hit $2.40 billion in February, up 4.58% month-to-month. They recorded 2.30 million tons in volume,” BPS deputy Ateng Hartono told a briefing in Jakarta on Wednesday.

The sweet Indonesian palm oil exports not only helped the nation notch a positive trade balance for 70 consecutive months since May 2020, but also bounced back to billions. The overall positive trade balance reached $1.27 billion in February, up from just $950 million the previous month.

Although Indonesia continues to supply the world with the commodity found in nearly everything, producers are feeling uneasy about the stagnant production. This can spell trouble if Indonesia fails to have it fixed by the time it imposes the mandatory palm oil blend in diesel from the current 40% to 50% — a move better known as the B50. 

Indonesian Palm Oil Association (Gapki) warned that diverting exports to biodiesel — without beefing up existing production — would be unwise. Indonesia has entirely subsidized the biodiesel program via palm oil export levies. In other words, fewer exports can weaken levy collection, thereby fueling budgetary constraints. The levy is at 12.5% of the palm oil reference price.

“Our production is stagnant. Forcing [a higher biodiesel mix] will only undermine our export. The only solution is to boost output by improving productivity,” Gapki chair Eddy Martono said not long ago.

“No dime of the state budget has been spent on biodiesel.”

The government has officially decided to implement the B50 biodiesel expansion in July. This move is part of Indonesia’s strategy in navigating the Iran-war-induced energy shocks and easing fiscal pressures. Iran has blocked the Strait of Hormuz, one of the world’s busiest oil shipping channels, since the US-Israeli joint military attack in the country in late February.

Senior minister Airlangga Hartarto estimated that the upcoming B50 policy could save Rp 48 trillion ($2.8 billion) in slashed fuel subsidies. He told reporters that the state energy firm Pertamina “is ready to implement the blending.” Fossil fuel consumption is expected to shrink by 4 million kiloliters once the B50 goes live. 

China, India, and Pakistan have been the top traditional markets for Indonesian palm oil.

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