MalayMail/Reuters-Mar 11
Prices of cooking oil could be buoyed up for years by stagnating production and a biodiesel push in top producer Indonesia that are making traditionally cheap palm oil costlier, eliminating an advantage that also curbed prices of rival oils.
Used in everything from cakes and frying fats to cosmetics and cleaning products, palm oil makes up more than half of global vegetable oil shipments and is especially popular among consumers in emerging markets, led by India.
After decades of cheap palm oil, thanks to booming output and a battle for market share, output is slowing and Indonesia is using more to make biodiesel, respected industry analyst Dorab Mistry said. “Those days of US$400 (RM1,770)-per-ton discounts are gone,” added Mistry, a director of Indian consumer goods company Godrej International. Indonesia increased the mandatory mix of palm oil in biodiesel to 40 per cent this year, and is studying moving to 50 per cent in 2026, as well as a 3 per cent blend for jet fuel next year, as it seeks to curb fuel imports. The biodiesel push will reduce Indonesia’s exports to just 20 million metric tons in 2030, down a third from 29.5 million in 2024, estimates Eddy Martonneo, chairman of the south-east Asian nation’s largest palm oil association, GAPKI. Jakarta’s biodiesel mandate, coupled with lower production because of floods in neighboring Malaysia, has already lifted palm oil prices above rival soy oil, prompting buyers to cut purchases. Palm oil production, dominated by Indonesia and Malaysia, nearly doubled every decade from 1980 to 2020, fueling criticism over deforestation to add plantations. During that time, average annual production growth of more than 7 per cent was roughly in line with demand. But Malaysia’s palm oil production stagnated more than a decade ago because of lack of space for new plantations and slow replanting, while deforestation concerns have slowed growth in Indonesia. Even in Indonesia, replanting by smallholders, who generate 40 per cent of its supply, remains sluggish. As a result, global production growth has slowed to 1 per cent annually over the past four years. Read more at:
