Indonesia has confirmed it intends to implement B50 next year, and the government says fuel take-up is running to plan. Vesper’s read is that full implementation would be challenging, and the distance between the two scenarios is wide enough to matter for anyone buying palm oil forward. Full B50 would raise the minimum volume of palm oil going into biofuels by 2.4 million tonnes. Growth beyond B40 that stops short of the full step delivers around 1 million.
That demand question is arriving while the supply side is already uneasy. GAPKI has said Indonesian output in 2027 could fall 2.9% to 56.8 million tonnes, with El Nino effects already visible, and low water levels on key rivers have begun to disrupt shipments. The curve keeps splitting as a result: BMD October edged up to MYR 4,816 a tonne from MYR 4,788, held back by the 5% to 6% build market polls expect in Malaysian August stocks, while January moved to MYR 5,214 from MYR 5,067. Indonesian exports in August likely rose 6.5% on July, with Indian demand favoring Indonesia over Malaysia, and Indian buying should stay strong through the festive season before Oct-Dec imports ease.
Washington’s turn
US biofuel policy moved in the same week. The EPA’s small refinery exemptions for the 2025 compliance year came in at 1.76 billion renewable fuel credits, close to double what the agency first expected to grant, and it now plans to propose by the end of October that the entire difference between actual and estimated exemptions be shifted onto larger refiners in 2026 and 2027. Market participants doubt that reallocation is achievable without drawing down accumulated RINs, which would mean sharply higher physical biofuel demand and scarcer feedstock. That is fundamentally supportive for soybean oil, even though CBOT October fell from 70.83 to 68.89 cents a pound last week on what participants describe as profit-taking, with long positions staying heavy. Soybeans went the other way, the November contract rising to 1,309 cents a bushel from 1,288 on Chinese demand and weather, and traders are watching for tariff relief from a Trump-Xi meeting expected at the end of September.
Mandates on both sides of the Atlantic are pulling at the same feedstock, and the rapeseed oil complex is where the tightening shows. MATIF rapeseed for November rose to EUR 556 a tonne from EUR 544. Canadian crushers processed 1.322 million tonnes of canola in July, up 36.5% year on year and the highest month of the 2025/26 marketing year, and Vesper’s estimates put Canadian canola stocks below the year-earlier level for the first time this season, at around 1.46 million tonnes against 1.6 million. Canada has started harvesting and Ukrainian rapeseed planting is about 40% done.
Sunflower oil was the exception. October crude eased to $1,405/mt from $1,430/mt after US mediators visited Moscow and Kyiv, and with a large crop coming in and a season of high prices behind them, buyers would rather wait on a Black Sea outcome than commit. The physical constraint has not moved: around 80 vessels are still queued for the Danube’s Sulina Canal, held up by a shortage of pilots and the prioritization of fuel cargoes. From October, Turkey will import sunflower oil from Moldova and Europe after cutting its import tax to 12%, which could pull at the EU balance unless Ukrainian seed compensates.
The lauric complex firmed. Crude coconut oil CIF Rotterdam rose to $2,110/mt from $2,060/mt as copra prices climbed, while palm kernel oil eased to $2,000/mt on comfortable nearby availability. Spanish extra virgin olive oil softened as the 2025/26 season runs down, with Spanish refiners stocking up ahead of new lampante oils that will not reach the market until December or January.
