Palm kernel or babassu oil and fractions market in Indonesia

Earlier Report Observations

The domestic market for palm kernel or babassu oil in Indonesia expanded from 2.6 million tons in 2018 to 3.6 million tons in 2023. This sustained growth was primarily driven by rising domestic demand, fueled by population growth and increasing per capita GDP, alongside the government's push for biodiesel usage which set national consumption targets. The non-food oleochemical sector, including pharmaceuticals and cosmetics, also contributed with steady annual demand growth.

A key accelerator was the implementation of the B35 biodiesel mandate, which from 2024 increased the use of palm kernel oil as a feedstock. This policy-driven demand was supported by significant capacity investments from major players like Wilmar International, which allocated $400 million to upgrade local processing facilities, and Musim Mas, which expanded through acquisitions to boost production efficiency and supply chain output.

Market dynamics were further shaped by a 28% drop in palm oil prices in 2023, which enhanced affordability for domestic consumers. Concurrently, environmental pressures and global market demands led to the broader adoption of sustainable palm oil certification, influencing production practices while the overall market volume continued its upward trajectory.

Production palm kernel or babassu oil and fractions in Indonesia

In kind, 2018-2021, K t

From 2018 to 2021, Indonesia held the top position globally in the production of palm kernel or babassu oil and fractions.

Top producers of palm kernel or babassu oil and fractions, 2018-2021

World map of production of palm kernel or babassu oil and fractions, 2018-2021

In 2021, Indonesia produced 4 653 K t of palm kernel or babassu oil and fractions, marking a 4.6% increase compared to 2020. Over the period from 2018 to 2021, production grew by 6.6%, which translates to an annualized rate of 2.2%. The largest decline occurred in 2020, at 2.8%, while the highest increase was recorded in 2019, at 4.9%.

Annual dynamics of production in Indonesia in kind, 2018-2021, K t

Exports palm kernel or babassu oil and fractions from Indonesia

Exports in kind, K t

Indonesia's exports of palm kernel or babassu oil and fractions declined for the second year in a row. In 2021, exports totaled 1 418 K t, representing a significant drop of 16.5% from 2020. Between 2018 and 2021, exports decreased by 20%, with a compound annual growth rate of -7.2%. The peak value was reached in 2019 at 1 937 K t, which also saw the largest increase of 9.3%.

Annual dynamics of product's exports from Indonesia in kind, 2018-2021, K t

From 2018 to 2021, the primary buyers of palm kernel or babassu oil and fractions from Indonesia were China, accounting for 33.5% of exports in kind, the United States at 12.2%, and Brazil at 11.2%. Together, these three countries made up 56.9% of total exports in kind.

Structure of product's exports in kind by countries, 2018-2021

World map of product's exports from Indonesia in kind, 2018-2021

Exports in value, M $ US

Indonesia's exports of palm kernel or babassu oil and fractions in value terms increased for the second consecutive year. In 2021, exports amounted to 1 926 M $ US, a 45.0% rise compared to the previous year. Over the 2018-2021 period, exports grew by 13.2%, equating to an annualized rate of 4.2%. The lowest value was recorded in 2019 at 1 269 M $ US, which also experienced the largest decline of 25.4%.

Annual dynamics of product's exports from Indonesia in value, 2018-2021, M $ US

Throughout 2018 to 2021, China, with 31.7% of exports in value terms, the United States at 13.9%, and Brazil at 11.7%, formed the core of Indonesia's export market, collectively accounting for 57.3% of total flows.

Structure of product's exports in value by countries, 2018-2021

World map of product's exports from Indonesia in value, 2018-2021

Imports palm kernel or babassu oil and fractions to Indonesia

Imports in kind, K t

The market showed considerable volatility during these years. Imports reached their lowest point in 2021 and peaked in 2020, with a 7 730-fold difference between these two years. In 2021, Indonesia's imports of foreign palm kernel or babassu oil and fractions stood at 0.0 K t, down by 100.0% from the previous year. The maximum value was recorded in 2020 at 1 K t, while the largest increase occurred in 2019 at 604.7%.

Annual dynamics of product's imports to Indonesia in kind, 2018-2021, K t

Between 2018 and 2021, Japan and Papua New Guinea were the dominant sources for Indonesia's imports in kind, jointly accounting for 94.6% of total flows, with the remainder distributed among other markets.

Structure of product's imports in kind by countries, 2018-2021

World map of product's imports to Indonesia in kind, 2018-2021

Imports in value, M $ US

Market performance exhibited noticeable fluctuations over this period. Import levels varied by 300 times between the high in 2020 and the low in 2021. In 2021, Indonesia imported approximately 0.0 M $ US of palm kernel or babassu oil and fractions, a decrease of 99.7% compared to the previous year. The maximum value was recorded in 2020 at 1 M $ US, which also saw the largest increase of 357.0%.

Annual dynamics of product's imports to Indonesia in value, 2018-2021, M $ US

From 2018 to 2021, Japan clearly dominated Indonesia's imports in value terms of palm kernel or babassu oil and fractions, holding 75.6% of total flows, while other countries each had significantly smaller shares.

Structure of product's imports in value by countries, 2018-2021

World map of product's imports to Indonesia in value, 2018-2021