Mistry predicts a jump in palm oil on Indonesian biofuel mandate

INDONESIA’S mandate to use more palm oil for producing biofuels and lower reserves in Malaysia will continue to support the tropical oil in the coming months, according to veteran trader Dorab Mistry.

The most-consumed cooking oil may trade between 3,500 ringgit ($791) and 5,000 ringgit a ton between now and the end of May, unless the war in Ukraine ends, said Mistry, who has been trading palm for about four decades.

“The war has cast a huge unexpected shadow on the world economy,” he said in slides prepared for an industry conference in Goa.

The latest prediction by Mistry, who’s a director at Godrej International Ltd., compared with his November forecast of prices reaching as high as 4,500 ringgit a ton through the end of March 2023.

Mistry boosts palm oil forecasts as war in Ukraine continues

PALM oil futures, which recently hit a two-month low, closed 1 percent higher at 3,918 ringgit on Friday. The vegetable oil had slumped to 3,336 ringgit in late September, it lowest since early 2021.

Mistry said that higher demand from the biofuel industry would continue to support palm prices. His comments followed an announcement by Indonesia, the world ’s biggest palm oil producer, on Friday to raise its biofuel blending ratio from January.

The new mandate, known as the B35, will require the country’s biodiesel to contain 35 percent palm oil from next year, compared with the current 30 percent mix. The move has the potential to cut palm exports from the country, which accounts for about a third of global edible oil trade.

More details from Mistry’s presentation:

Second-biggest grower Malaysia will produce close to 19 million tons of palm oil next year as labor shortages ease. Indonesia will produce only about 1.5 million tons more than this year.

Indonesia may increase its biodiesel use to 40 percent. The Southeast Asian country’s B35 rule may keep palm stockpiles tight in the first half of 2023.

Malaysian palm oil stockpiles will continue to drop until May 2023, and slip below 2 million tons.

India’s total edible oil imports may total 14.4 million tons in 202223, compared with 14.2 million a year earlier. Palm oil purchases will likely climb to about 8.3 million tons from 7.93 million.

United States EPA’S announce men to nb io fuel man dates was a“damp squib.” The scale of the resulting selloff surprised most of the market and soy oil’s premium to palm narrowed.

Potato shortage

AUSTRALIANS looking forward to demolishing a serving (or three) of fries at home this summer may be forced to curb their appetite after a top grocer restricted purchases following a potato shortage.

Coles Group Ltd., Australia’s second-largest supermarket chain, imposed a temporary purchase limit of two lots of frozen fries per transaction, citing supply issues, according to a statement posted on its web site Thursday.

Flooding and heavy rain across Australia’s east coast this year damaged an array of crops from lettuce to wheat and fruits, leading to shortages of a lot of household staples. Wet weather in Tasmania hampered sowing efforts for potatoes and many farmers have been unable to access fields with machinery, according to industry group AUSVEG.

“It’s delayed planting windows, and you can only delay the window so long before you start to lose the opportunity,” said Shaun Lindhe, the national manager of communications for AUSVEG. The impact on processed potato products will likely persist into 2023, he added.

Australia’s weather-related chaos is exacerbating already strained food markets, which were sent into a tailspin following Russia’s invasion of Ukraine in late February. The war has snarled global supply chains and driven up the price of vital farming inputs.

Disruptions are translating into higher grocery bills just as consumers face elevated day-to-day living costs. Australia’s annual headline inf lation figure accelerated to a 32-year high in the third quarter.