‘PALM OIL PRICES SET TO RISE’
Commodity likely to trade between RM2,200 and RM2,500 on higher global biodiesel consumption, say analysts
THERE is optimism that palm oil will trade between RM2,200 and RM2,500 per tonne this year as analysts see higher global biodiesel consumption in Indonesia, Malaysia, Thailand and Colombia.
Since January, palm oil futures on Bursa Malaysia Derivatives Market have averaged RM2,100 per tonne.
Palm oil prices would continue to be influenced by petroleum prices, said LMC International Ltd chairman Dr James Fry at the 30th Palm and Lauric Oils Price Outlook Conference and Exhibition (POC 2019), here, yesterday.
He said since last month, Malaysia’s fuel stations had switched to B10 biodiesel from the B7 blend, and was using more palm oil in the transport industry.
As long as the Organisation of the Petroleum Exporting Countries and the United States shale oil producers collectively support Brent crude oil at between US$60 (RM244.20) and US$65 per barrel, Fry expects palm oil to trade between RM2,240 and RM2,360 per tonne.
He said this when presenting his paper entitled “Tying Together Supply and Demand, Politics and Petroleum in Today’s World of Oil Palm”.
Oil World executive director Thomas Mielke agreed with Fry that global demand for palm oil was starting to pick up due to higher biodiesel mandates.
“I do see higher palm oil consumption on higher biodiesel demand. There is upward potential for palm oil prices to trade between US$580 and US$600 per tonne in the next six months,” he said.
The European Union has been trying to block palm oil shipments from Africa and Asia into Europe. The European Commission had singled out palm biofuel as “high risk” in terms of “indirect land use change” in “high carbon stock” areas and wanted it to be excluded from Europe’s transport use.
Mielke said he rejected the EU’s biased policies.
“I urge all to stand up against discrimination and the EU’s intention to ban palm biodiesel. We should even go on the offensive with the EU,” he said.
Many palm oil exporters expect supply to be slightly capped by the mild El Nino phenomenon and are looking to Indonesia’s increasing biodiesel mandate for price support.
Indonesia encourages biodiesel usage to boost higher demand for palm oil, which is used for blending into biodiesel.
Since July 2015, the world’s top palm oil producer began collecting a US$50 per tonne levy on crude palm oil exports to fund higher biodiesel subsidies.
Triputra Agro Persada group co-founder and chief executive officer Arif P. Rachmat said Indonesia’s palm biodiesel mandate was price supportive.
“I think palm oil will trade at between US$550 and US$600 per tonne as global demand starts to pick up,” said Arif at a discussion entitled “Manage Uncertainties, Harvest Global Opportunities”.
POC 2019 saw 2,000 global vegetable oil analysts sharing knowledge on global palm oil industry trends.