Key facts
- The Indonesian Palm Oil Association forecast crude palm oil production would fall about 3 million tons in 2027.
- The association said export volumes could fall by up to 5 million tons in 2027.
- Domestic crude palm oil demand for biodiesel is expected to rise to about 18 million tons.
- The association said El Nino had not been felt much in 2026 production but dry weather was reducing water for plants.
Indonesia's palm oil industry is facing shortages as a severe El Nino weather phenomenon and fires threaten production, even as demand rises due to the government's drive to expand use of biodiesel, the Indonesian Palm Oil Association said at its annual conference in Bali on November 12 and 13.
The association's chairman, Eddy Martono, said El Nino had begun to weigh on plantation productivity. Dry weather has reduced water availability for plants, prompting some farmers to delay fertilizing, he said. He forecast crude palm oil production would fall about 3 million tons in 2027, while domestic demand for biodiesel would rise to about 18 million tons. Export volumes could fall by up to 5 million tons in 2027, he said, adding that the figure could change depending on production through the end of the year.
Martono said the impact of El Nino had not been felt much in palm oil production during 2026.