Koon Yew Yin, 13th Dec 2024

Indonesia remains committed to start implementing a 40% mandatory biodiesel mix with palm oil-based fuel, or B40, on Jan 1 next year, its chief economic minister said. Indonesia, the world's largest palm oil producer, currently uses B35, a 35% blend of palm oil-based biodiesel.

Minister Airlangga Hartarto said the B40 implementation was Indonesia's "concrete contribution to the world", as it could reduce carbon dioxide emissions by about 40 million metric tonnes.

In Indonesia, the cost of producing biodiesel is cheaper than import of fossil diesel fuel. That is why Indonesia have decided to use more palm oil to produce B40 biodiesel, in a bid to reduce fossil fuel import. As a result, CPO price will rise higher in 2025. CPO price has been rising as shown by the CPO price chart below.

The last time CPO price rosed higher than the current price was due to Covid 19 pandemic lockdown when foreign workers could not migrate to Malaysia to work in plantation estates. The demand for CPO was more than supply. As a result, CPO shot up higher than the current price.

The current situation is different. Foreign workers can come to work. All plantations have workers to produce palm oil every day to selling at record price. As a result, all plantation companies will report historical record profit.

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