Indonesia plans to implement B40 in January

In that case, rates may rally 10%-15% in Jan-March, Mielke states

B40 will require extra 3 mln heaps feedstock, GAPKI states

Malaysia palm oil criteria at greatest because mid-2022

India may withdraw import tax hike amidst inflation, Mistry states

(Adds expert remarks, updates Malaysia's palm oil criteria cost)

By Bernadette Christina

NUSA DUA, Indonesia, Nov 8 (Reuters) - Indonesia's palm oil output is forecast to recuperate in 2025 after an expected drop this year, however prices are expected to remain raised due to organized expansion of the country's biodiesel required, market analysts said.

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

Palm oil output next year in top manufacturer Indonesia is expected to recover by 1.5 million metric loads compared with a projected drop of just over a million tons this year, Julian McGill, handling director at Glenauk Economics, told the Indonesia Palm Oil Conference on Friday.

Thomas Mielke, head of Hamburg-based research study firm Oil World, said he expects Indonesia's palm oil production to increase by as much as 2 million tons next year after a 2.5 million ton drop in 2024.

While Indonesia's output is forecast to enhance, supply from somewhere else and of other veggie oils is seen tightening.

Palm oil output in neighbouring Malaysia is expected to dip somewhat next year after increasing by an approximated 1 million tons in 2024.

"We would need a recovery in palm in 2025 since combined exports of soya, sunflower and rapeseed oils are decreasing," Mielke stated.

'FRIGHTENING' PRICE SURGE

The cost rise in palm oil in the past 7 weeks has actually been "frightening" for purchasers, Mielke said, adding that it would rally by 10%-15% in January-March if Indonesia implements the so-called B40 policy.

The Indonesia Palm Oil Association stated additional feedstock of around 3 million tons will be needed for B40 execution, eroding export supply.

The present palm oil premium has currently caused palm to lose market share versus other oils, Mielke included.

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

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

"Sentiment right now is red-hot and exceptionally bullish, we have to beware," stated Dorab Mistry, director at Indian durable goods business Godrej International.

He forecast the Malaysian cost around 5,000 ringgit and above up until June 2025.

Mielke and Mistry advised Indonesia to

think about postponing

B40 execution on concern about its effect 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)