Indonesia prepares to implement B40 in January

Because case, prices might rally 10%-15% in Jan-March, Mielke states

B40 will require additional 3 mln lots feedstock, GAPKI says

Malaysia palm oil criteria at highest considering that mid-2022

India might withdraw import tax hike amidst inflation, Mistry says

(Adds analyst remarks, updates Malaysia's palm oil criteria rate)

By Bernadette Christina

NUSA DUA, Indonesia, Nov 8 (Reuters) - Indonesia's palm oil output is forecast to recover in 2025 after an expected drop this year, but rates are expected to stay raised due to planned expansion of the nation's biodiesel mandate, industry experts said.

The palm oil benchmark cost in Malaysia has increased more than 35% this year, lifted by slow output and Indonesia's strategy to increase the obligatory domestic biodiesel blend to 40% in January from 35% now in an effort to reduce fuel imports.

Palm oil output next year in leading producer Indonesia is expected to recover by 1.5 million metric heaps compared with a projected drop of simply over a million tons this year, Julian McGill, managing director at Glenauk Economics, informed the Indonesia Palm Oil Conference on Friday.

Thomas Mielke, head of Hamburg-based research company Oil World, stated he anticipates Indonesia's palm oil production to increase by as much as 2 million heaps next year after a 2.5 million ton drop in 2024.

While Indonesia's output is anticipated to enhance, provide from elsewhere and of other veggie oils is seen tightening.

Palm oil output in neighbouring Malaysia is expected to dip slightly next year after increasing by an estimated 1 million lots in 2024.

"We would require a healing in palm in 2025 because combined exports of soya, sunflower and rapeseed oils are declining," Mielke said.

'FRIGHTENING' PRICE SURGE

The price rise in palm oil in the previous seven weeks has been "frightening" for buyers, Mielke said, including that it would rally by 10%-15% in January-March if Indonesia imposes the so-called B40 policy.

The Oil Association said extra feedstock of around 3 million tons will be needed for B40 implementation, eroding export supply.

The current palm oil premium has actually currently caused palm to lose market share against other oils, Mielke added.

Malaysian palm oil prices are seen trading at around $950 to $1,050 per metric ton in 2025, McGill of Glenauk approximated.

Benchmark Malaysian palm oil touched 5,104 ringgit ($1,165.30) on Friday, the highest because mid-2022.

"Sentiment today is red-hot and very bullish, we have to beware," said Dorab Mistry, director at Indian consumer goods company Godrej International.

He anticipated the Malaysian rate around 5,000 ringgit and above until June 2025.

Mielke and Mistry prompted Indonesia to

consider postponing

B40 implementation on concern about its influence on food customers.

Meanwhile, Mistry expected top palm oil importer India to withdraw its

import duty hike

enforced from September after elections in the state of Maharashtra in November. ($1 = 4.3800 ringgit) (Reporting by Bernadette Christina Munthe Writing by Fransiska Nangoy; Editing by John Mair, Jane Merriman and Daren Butler)