Analysts Estimate Indonesia’s Biodiesel Program to Hike Palm Oil Prices

Palm oil prices in 2020 are forecast to rise on global turmoil and biodiesel mandate in Indonesia, Dorab Mistry, Director of Godrej International, said in Globoil India 2019. Speaking at a conference with the theme “World Supply Demand and Price Outlook of Oils for 2019-2020”, Mistry said Malaysian palm oil prices have further room to rally, with third-month futures climbing to 2,500 ringgit (US$596) per ton by March. According to Mistry, price outlook will depend on Brent crude oil prices and implementation of biodiesel program in Indonesia.

Analysts Estimate Indonesia’s Biodiesel Program to Hike Palm Oil Prices

Palm oil prices in 2020 are forecast to rise on global turmoil and biodiesel mandate in Indonesia, Dorab Mistry, Director of Godrej International, said in Globoil India 2019. Speaking at a conference with the theme “World Supply Demand and Price Outlook of Oils for 2019-2020”, Mistry said Malaysian palm oil prices have further room to rally, with third-month futures climbing to 2,500 ringgit (US$596) per ton by March. According to Mistry, price outlook will depend on Brent crude oil prices and implementation of biodiesel program in Indonesia. Indonesia currently has a biodiesel mandate of a 20% bio-content, known as the B20 program, and is aiming to implement a 30% bio-content mandate by January 2020. Forecasts are based on assumption for Brent crude at US$60-US$80 per barrel, easing of U.S. interest rates, weaker world economic growth, some political turmoil in the U.S. and gradually weakening dollar. Mistry said, RBD olein price may rise to more than US$600 a ton. Palm oil price for December delivery on Bursa Malaysia Derivatives down 1% to 2,147 ringgit/ton on Friday. Speaking at the same forum, James Fry, Chairman of LMC International, said that Indonesia Biodiesel output seen easing to 8 million tons next year. “Crude palm oil (CPO) prices will not move much until Q1, but will then react to the impact of two years of big cuts in fertiliser use, recent droughts, minimal growth in Indonesian output in 2019 and the boost to Southeast Asian biodiesel mandates,” Fry said. Mistry maintained his palm oil output estimation for Malaysia in 2019 at 20.3 million tons, compares with 19.5 million tons in 2018. Palm oil stockpiles in Malaysia is seen at 2.5 million tons to 2.6 million tons in December compared with 3.22 million tons a year ago. For Indonesian output, Mistry estimated a cut to 43 million tons from 45 million tons; compares with 42 million tons in 2018. Global palm oil production to estimated to increase by as much as 2 million tons in 2019 from a year ago. Mistry earlier saw a rise of at least 3.5 million tons. *** (Source: Bloomberg/Reuters)