Three major Southeast Asian palm oil producers are stepping up biodiesel blending mandates in moves that will reshape the feedstock picture for global vegetable oil buyers.

Indonesia plans to move to a B50 blend from July 2026 for public service obligation fuel, with non-PSO following in 2028. Malaysia is aiming to increase its mandate from B10 to B15, with B12 as an interim step. Thailand has restricted palm oil exports to ensure sufficient feedstock for a move from B5 to B7.

The combined effect is a larger share of regional palm oil output being absorbed by domestic biofuel demand rather than reaching export markets. Thailand’s export restriction is the most immediate development for buyers outside the region.

Biodiesel price picture

FOB ARA biodiesel prices are generally higher than a month ago, tracking recent movement in Brent crude. UCOME stands at $1,465 per metric ton versus $1,420 a month ago. FAME 0 is at $1,352 per metric ton versus $1,329. LSGO peaked at $1,207 per metric ton on 7 April before easing to $1,160 per metric ton as peace talks between the US and Iran took some heat out of energy markets.

Regulatory support builds on both sides of the Atlantic

On 31 March 2026, the Dutch Senate approved the revised RED III for the transport sector. Under the new regulations, double counting is abolished, implying higher physical demand for biofuels and price support.

The United States has set record Renewable Volume Obligations for 2026 and 2027. Biomass-based diesel RVOs have moved to 9.07 and 9.20 billion gallons, versus 5.36 in 2025. Total renewable fuel RVOs now stand at 26.81 and 27.02 billion gallons, versus 22.33 in 2025.

In Germany, market participants report that a vote on abolishing double counting has been pushed to May, keeping the market in wait-and-see mode.

UCO flows tighten

EXW Netherlands UCO prices have risen to €1,085 per metric ton from €1,030 a month ago, with market participants reporting strong spot demand. In Q1 2026, EU UCO imports totalled around 519,402 metric tons versus 606,832 in the same period last year, according to European Commission data. Chinese UCO exports in January and February reached a record 486,000 metric tons for the period, versus 341,000 last year. US UCO imports in January and February were at a record low 155,000 metric tons, versus 481,000 last year.

Outlook

For vegetable oil buyers, the near-term pressure is structural. Southeast Asian mandates are pulling palm oil into domestic biodiesel channels at the same time as US and Dutch regulations are lifting biofuel demand in the West. Combined with higher crude prices supporting biodiesel values, the feedstock competition is set to keep the vegetable oil complex firm into the summer months.

For the full biodiesel market analysis visit: https://app.vespertool.com/market-analysis/2896?commodity=vegetable-oil