Palm Oil Shines Again

English Version
15 September 2026
7:09 PM

Exports Reach US$19.45 Billion, Strengthening Indonesia’s Foreign Exchange Engine

Indonesian Palm Oil News (IPO News), Jakarta — Indonesia’s palm oil industry is once again demonstrating its strength as one of the country’s key export and foreign exchange earners. Amid continuing global economic uncertainty, international demand for Indonesian palm oil products remains resilient, while export value continues to show solid growth.

The latest data from the Indonesian Palm Oil Association (GAPKI) show that during January–June 2026, Indonesia’s palm oil product exports reached 16.595 million tonnes, up 5.79% from 15.686 million tonnes recorded during the same period in 2025.

More significantly, in terms of value, Indonesia’s palm oil product exports reached US$19.45 billion, representing a 12.57% increase from US$17.277 billion in the first half of 2025.

This means Indonesia is not merely shipping larger volumes of palm oil products to international markets; it is also generating increasingly significant foreign exchange earnings.

The performance reinforces the strategic role of palm oil as one of Indonesia’s major non-oil and gas export commodities.

Higher Export Value Supported by Prices

The increase in export value was not driven solely by higher volumes. Indonesia’s average CPO export price during January–June 2026 stood at approximately US$1,132 per tonne, higher than the US$1,088 average recorded during the same period a year earlier.

In other words, the combination of stronger export volumes and relatively firmer prices provided a positive boost to Indonesia’s export earnings.

The momentum became particularly visible in June 2026. Palm oil product exports reached approximately 3.275 million tonnes, surging 64.08% from 1.996 million tonnes in May. Export value reached approximately US$3.92 billion, up around 57.45% month-on-month.

The June increase was supported by stronger shipments to several major markets, including India, China, Pakistan, Malaysia, Bangladesh and the United States.

China, India and Pakistan: Three Giant Markets

Indonesia’s export strength is also reflected in the diversity and scale of its international markets.

Based on 2025 trade data, China was the largest destination for Indonesian palm oil by export value.

The five largest destinations for Indonesian palm oil in 2025 were:

Overall, Indonesia’s palm oil exports in 2025 were valued at approximately US$29 billion. China absorbed around 4.03 million tonnes, India approximately 3.31 million tonnes and Pakistan around 3.22 million tonnes.

The strength of demand from China, India and Pakistan demonstrates that Asia remains a critical market for Indonesia’s palm oil industry. These countries have large populations and substantial demand for vegetable oils for both food and industrial applications.

China Is Becoming Increasingly Important

China deserves particular attention. In addition to being Indonesia’s largest palm oil export destination by value in 2025, shipments of Indonesian palm oil products to China during the first half of 2026 reportedly increased 31% compared with the same period a year earlier.

This performance is particularly significant because several other traditional markets experienced declines.

During the first half of 2026, Indonesia’s palm oil exports to the United States declined 8%, while shipments to India and Pakistan each fell 7%. Exports to the European Union declined slightly by 1%.

In contrast, exports to Malaysia increased 13%, Russia rose 7%, while shipments to Africa and Bangladesh each grew 4%.

These developments highlight an important trend: Indonesia’s palm oil export market is constantly evolving. Market diversification will therefore remain essential to reduce excessive dependence on one or two major destinations.

Palm Oil and Indonesia’s Foreign Exchange Engine

Palm oil performance should also be viewed within the broader context of Indonesia’s national trade.

Statistics Indonesia (BPS) reported that Indonesia’s total exports during January–July 2026 reached US$167.03 billion, increasing 4.43% year-on-year.

Non-oil and gas exports reached US$160.01 billion, up 5.21%. Indonesia also maintained a trade surplus of approximately US$3.70 billion during the period.

Within this structure, CPO and its downstream products remain among Indonesia’s important export commodities.

The significance goes beyond plantation companies and palm oil processors. Foreign exchange generated through palm oil exports supports a broad economic ecosystem encompassing plantations, workers, processing facilities, logistics, ports, trading activities and downstream industries.

The Challenge: Moving Beyond Volume

Despite the positive outlook, Indonesia’s palm oil industry continues to face important challenges.

One of the biggest opportunities lies in increasing value added.

Indonesia has enormous strength in CPO production, but even greater economic potential exists in developing higher-value downstream products.

Food products, oleochemicals, specialty fats, surfactants, cosmetics, industrial ingredients and biofuel are among the downstream sectors capable of increasing the economic value generated from every tonne of Indonesian palm oil.

Therefore, the future success of the palm oil industry should not be measured solely by how many million tonnes Indonesia exports, but also by how much value Indonesia creates from every tonne of palm oil it produces.

Downstream Processing Can Generate More Foreign Exchange

This is where downstream industrial development becomes increasingly important.

If Indonesia primarily exports raw materials or relatively low-value products, a significant portion of the potential economic value remains to be captured further along the global supply chain.

By contrast, increasing domestic production of downstream palm oil products can generate greater value added, investment, employment and economic activity within Indonesia.

This represents one of the biggest opportunities for the national palm oil industry.

With its enormous production base, large domestic market and position as one of the world’s leading palm oil producers, Indonesia has a strong foundation for developing an integrated palm oil industry from upstream plantations to sophisticated downstream manufacturing.

B40, B50 and the Future of Exports

At the same time, greater domestic utilisation of palm oil for biodiesel creates an important policy consideration.

The larger the volume of palm oil absorbed by the domestic biodiesel programme, the greater the potential contribution to reducing diesel imports and strengthening national energy security.

However, some of that palm oil will no longer be available for export markets.

The challenge for policymakers, therefore, is to strike the right balance between energy security, food security, farmer welfare, downstream industrial development and foreign exchange earnings.

With higher plantation productivity, replanting programmes, greater efficiency and stronger downstream development, Indonesia has an opportunity to increase economic output without relying solely on land expansion.

A Strong Outlook Remains

Looking at the first-half 2026 performance, it would be difficult to conclude that Indonesia’s palm oil industry is losing its global competitiveness.

The opposite appears to be the case.

The data show that international demand for Indonesian palm oil products remains strong. Exports reached 16.595 million tonnes during the first six months of 2026, while export value reached US$19.45 billion.

China, India, Pakistan, the United States and Bangladesh remain among the largest destinations, while markets in Africa and other parts of Asia continue to provide additional growth opportunities.

The next challenge is how Indonesia can transform this strength into greater foreign exchange earnings, higher value added and broader economic prosperity.

Palm Oil Is More Than a Commodity

Ultimately, palm oil is much more than a plantation commodity.

Behind every shipment are millions of hectares of plantations, farmers, workers, plantation companies, palm oil mills, logistics providers, ports, food manufacturers, oleochemical industries, energy producers and international buyers.

Therefore, when palm oil exports rise, it is not merely an export statistic that moves. An enormous economic ecosystem moves with it.

With first-half 2026 exports reaching US$19.45 billion and export value growing 12.57%, palm oil is once again demonstrating why it deserves to be regarded as one of Indonesia’s strategic foreign exchange engines.

Indonesia’s challenge now is no longer simply how to sell more palm oil to the world, but how to ensure that every tonne of Indonesian palm oil generates the maximum possible economic value for Indonesia.

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