Palm’s Perfect Storm: Biodiesel Mandates and Slow Replanting to Tighten Global Palm Oil Supplies Over the Next Decade

Rabobank expects the combination of rising global food demand, increases in Indonesia’s and Malaysia’s biodiesel mandates, and inadequate oil palm replanting in recent years will constrain future supplies and amplify the global palm oil deficit post-2025.

Large-scale oil palm replanting in Indonesia and Malaysia, especially in smallholder plantations, is needed to prevent declining palm oil yields in the future and to meet global vegetable oil demand. If such replanting is quickly introduced, the resulting additional supplies would largely become available from 2025 and could limit future global palm oil deficits.

“In our 2018 report, we highlighted the importance of replanting in Indonesia and Malaysia to increase future global palm oil production,” says Oscar Tjakra, Senior Analyst – Grains & Oilseeds. “Since then, few developments that would change our previous forecasts of tightening global supplies have occurred.”

The main impact of the current situation is:
- Palm oil importers to struggle to find needed volumes post 2025, while palm plantations to benefit from strong prices.
- Other oilseed industries to benefit from strong vegetable oil demand to partially fill the gap between shrinking palm oil production and long-term rising global vegetable oil needs.
- Stakeholders in vegetable oil industries need to develop long-term strategies.