KUALA LUMPUR (Feb 26): Indonesia's 2025 palm oil exports are likely to drop 7.3% from a year ago to 27.35 million metric tonnes despite higher production as the world's biggest producer of the edible oil boosts biodiesel output, a senior industry official said on Wednesday.

The country's crude palm oil production is likely to rise to 50 million metric tonnes in 2025 from 48.16 million metric tonnes a year ago, Fadhil Hasan, head of the trade and promotion division at the Indonesian Palm Oil Association, said in a presentation.

"Rising biodiesel mandate is reducing surplus for the exports and this trend will continue," he said.

Indonesia expects its B40 biodiesel programme, aimed at reducing its reliance on imported diesel fuel, will reach full implementation next month after delays at the start of the year.

The country launched the mandatory B40 mix, containing 40% of palm oil fuel, from January 1 but faced some delays due to regulatory issues. Fuel distributors were given until the end of February as a transition period.

The blending previously contained 35% palm oil.

Higher use of palm oil, the most widely used edible oil in the world, has tightened supplies and lifted prices, making it more expensive than prices of rivals such as soybean oil.

Indonesia's 2025 palm oil use for biodiesel is likely to climb 13.6 million metric tonnes, up from 11.44 million tonnes a year ago, Fadhil said.

The country, the world's biggest palm oil producer funds the biodiesel programme by imposing an export levy, which is used to subsidise biodiesel for consumers.

However, the government has decided to subsidise about half of the biodiesel allocated for 2025. "Indonesia does not need to revise levy on exports to fund its B40 programme," Fadhil said.

Its plantation fund is expected to distribute 35.47 trillion rupiah (US$2.2 billion or RM9.7 billion) to subsidise the country's mandatory biodiesel programme, energy ministry official Eniya Listiani Dewi told parliament members.

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