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Indonesian wildfires are sending shockwaves through the global palm oil market, with benchmark prices climbing as much as 0.9% to 4,975 ringgit (US$1,229) per ton on Monday, fueled by deepening disruption to output in the world's largest producing country.
The fires, intensified by this year's powerful El Niño, are blanketing Southeast Asia in thick haze and choking supply chains from farm to export terminal. Dense smoke is blocking the sunlight that palm fruits need to ripen, while a significant share of plantation workers have been redeployed from harvesting duties to frontline firefighting operations.
Field monitoring reports indicate that more than 202,000 hectares of land have already burned across the islands of Borneo and Sumatra, with smoke drifting as far as Malaysia and Singapore and pushing air quality to hazardous levels in both neighboring countries.
Compounding the supply strain, the recent rally in crude oil prices is lifting demand for palm oil as a cost-competitive feedstock for biofuel production, adding further upward pressure to the market.
Source: NewsBytes