JAKARTA, INDONESIA — Indonesia will produce less palm oil than expected due to an export ban and less-than-optimum fertilizer application, according to a report from the Foreign Agricultural Service of the US Department of Agriculture (USDA).

Production is estimated at 44.7 million tonnes for 2022-23. Demand for industrial palm oil was revised upward to 10.5 million tonnes on higher biodiesel production demand in overseas markets, the USDA said.

“A narrow spread between palm oil diesel and fossil diesel prices stimulated discretionary blending in several export markets in 2022,” the Department said.

Exports in 2021-22 dropped 17% to 22.3 million tonnes due to policies either restricting or banning exports of palm oil products. A rebound to 29 million tonnes is expected in 2022-23 on stronger demand from key markets and price competitiveness among other vegetable oils. The government extended its suspension of the export levy to this December.

Soybean production was revised downward to 390,000 tonnes on lower yields. Consumption also was revised downward 10% to 2.86 million tonnes on continued lower demand from the tofu and tempeh industry, the USDA said.