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Palm oil prices are expected to rise by around 12% by mid-July, reaching about RM5,200, or US$1,329, per metric tonne, according to Reuters, citing forecasts by Dorab Mistry, a global analyst and director at India’s Godrej International.
The expected rise in the price of the world’s most widely consumed edible oil is largely linked to growing interest in biodiesel programs and stronger energy markets. Higher crude oil prices have made palm oil a more attractive feedstock for biodiesel production compared with conventional fuel.
In late March, Indonesia announced plans to raise the palm oil share in its diesel blend from 40%, or B40, to 50%, or B50, starting in July. Malaysia also plans to begin producing a B15 biodiesel blend containing 15% palm oil in June as part of efforts to reduce domestic diesel costs.
According to Mistry, prices could reach RM5,000 by June. Palm oil prices had already increased by around 15% since tensions escalated earlier in the year.
Analysts also point to higher biofuel blending requirements in the United States as another supportive factor. Under targets set by the U.S. Environmental Protection Agency, biodiesel producers using soybean oil are expected to raise production significantly this year. This could reduce available soybean oil exports and support palm oil prices, as the two oils compete directly in the global vegetable oil market.
Source: Ecofin Agency
