Global Biodiesel Demand Rises, CPO Prices Predicted to Continue Surging

JAKARTA, KOMPAS.com - Global crude palm oil (CPO) prices are predicted to continue rising over the next few months. The Indonesia Palm Oil Strategic Studies (IPOSS) states that Indonesia’s palm oil industry in the second quarter of 2026 will face increasingly complex geopolitical turbulence. “This is primarily driven by the rise in global energy prices amid escalating conflicts involving Iran versus the United States and Israel,” as quoted from IPOSS’s official statement on Friday (3/4/2026). In the Indonesian Palm Oil Industry Outlook for Q2 2026, IPOSS projects that global CPO prices will increase from US$1,165 per tonne in March to around US$1,440 per tonne in April. “It is estimated to reach approximately US$1,783 per tonne in June 2026,” according to IPOSS. The think tank views this rise in global CPO prices as not solely due to the US and Israel war against Iran. IPOSS sees this increase as reflecting the growing linkage between the palm oil market and global energy markets. The rise in world crude oil prices, according to them, also boosts CPO prices, which serve as a raw material substitute for diesel. “When crude oil prices increase, biodiesel becomes relatively more competitive compared to fossil fuels, while logistics, distribution costs, and global risk premiums also rise,” according to IPOSS. Amid this energy crisis threat, CPO is no longer viewed merely as a food and industrial commodity. “It has a strategic function in the energy system,” writes IPOSS. The rise in global market prices is also projected to strengthen domestic CPO prices in Q2 2026. Although domestic prices are not solely determined by international market prices, domestic policies such as Reference Prices, Export Duties, and Export Levies will also influence them. IPOSS projects that domestic CPO prices, which stood at Rp 15,065 per kilogram in March, will rise to Rp 18,776 per kilogram in April.