(Reuters) - Indonesia plans to increase the fuel content based on palm oil in its biodiesel from 30 percent to 35 percent as of July 20, Dadan Kusdiana, a senior official at the Indian Energy Ministry, said on Friday.

The world's largest palm oil producer is struggling to reduce product inventories, which have increased after a three-week ban on exports. The suspension, which ended in May, was aimed at controlling domestic cooking oil prices.

The high stock has been weighing on palm fruit prices, generating criticism from farmers who are in the middle of the peak of the harvest.

Dadan said the increase in the proportion, known as "B35," would create an additional demand of 727,804 KL of palm oil fuel this year, bringing annual consumption to 10.88 million KL. Consumption as of July was estimated at 5.78 million KL.

The ministry also announced tests for the B40 fuel.

"While we wait for the b40 test result, the government will implement B35," Dadan said in a statement.

Senior Minister Luhut Pandjaitan estimated this week that an additional 2.5 million tons of palm oil could be absorbed if Indonesia implemented the B40.

Other efforts that authorities are considering to reduce inventories include reducing the export rate of palm oil to stimulate exports.

Source: Notícias Agrícolas