Kuala lumpur: The crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives closed lower on Thursday as traders reacted to Indonesia's official announcement of its B50 biodiesel mandate, which projected lower-than-expected domestic palm oil consumption.

According to BERNAMA News Agency, Mumbai-based Sunvin Group commodity research head Anilkumar Bagani noted that the market had anticipated the B50 programme would absorb about 17.6 million tonnes of CPO. However, the official announcement indicated consumption of 16.7 million tonnes, which affected market sentiment.

Bagani explained that allocations have yet to be announced, and the market is waiting for further details. These details will be crucial in determining the actual volume of CPO to be utilised under the B50 programme. When asked about the possibility of CPO prices recovering once the allocation details are released, he stated that it would depend on the market's reaction to the announcement.

Indonesia has officially launched its mandatory B50 biodiesel programme, which the government claims will allow the country to eliminate diesel imports for the first time. Energy and Mineral Resources Minister Bahlil Lahadalia mentioned that Indonesia consumes between 38 million and 40 million kilolitres of diesel annually and previously imported around three million to four million kilolitres a year before the B50 biodiesel introduction.

The programme is expected to increase domestic crude palm oil (CPO) demand from 15.2 million tonnes to between 16.3 million and 17 million tonnes annually, providing greater market certainty for the country's oil palm farmers.

At the close, the spot month July 2026 contract decreased RM21 to RM4,482 a tonne, August 2026 eased RM16 to RM4,556, September 2026 slipped RM15 to RM4,594, October 2026 went down RM10 to RM4,627, November 2026 shed RM9 to RM4,659, and December 2026 inched down RM5 to RM4,689. The trading volume declined to 84,918 lots from 96,582 lots on Wednesday, while open interest weakened to 284,416 contracts from 288,327 contracts previously. The physical CPO price for July South remained unchanged at RM4,530 per tonne.