The end of cheap palm oil? Output stalls as biodiesel demand surges

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Kuala Lumpur/Jakarta: Cooking oil prices can be produced for many years by pushing biodiesel into the top producer Indonesia, which is traditionally making cheap palm oil expensive, which eliminates a benefit which also prevents rival oil prices.

Used in everything from cakes and frying to cosmetics and cleaning products, Palm Oil makes more than half of global vegetable oil delivery and is especially popular among consumers in emerging markets, headed by India.

After decades of cheap palm oil, the output is slowing down on the rise and the market share is slowing down and Indonesia is using more to make bio -diesel, said Dorb Mistrust, a respected industry analyst.

“In those days, $ 400-tonne exemption has ended in those days,” said Mysterey, director of the Indian Consumer Goods Company Godridge International. “As long as Indonesia prefers biodiesel, palm oil will not be so cheap.”

Indonesia has increased the mandatory mixture of palm oil in biodiesel this year to 40 %, and is studying the 3.0 % compound for jet fuel next year in 2026, as it seeks to prevent fuel imports.

Biodiesel Push will reduce Indonesia’s exports to just 20 million metric tons in 2030, lowering from 29.5 million in 2024, Southeast Asian Nation’s largest palm oil association, Gapki chairman Eddie Martono.

Jakarta’s Biodesel Mandate, which is combined with low production due to floods in the neighboring country of Malaysia, has already raised palm oil prices above the rival Savel, which indicates buyers to buy.

In India, the largest buyer of vegetable oil, raw palm oil (CPO), has ordered a premium on raw soybean oil for the past six months, which is sometimes more than $ 100 per tonne. As recently at the end of 2022, Palm Oil traded over $ 400.

Indians were paying $ 1,185 a ton for raw palm oil last week, which was less than $ 500 in 2019. High prices for vegetable oil can complicate government inflation efforts, whether in palm oil countries or rival soybeans, sunflower, and excessive oils.

Stunted growth

Palm oil production, which dominates Indonesia and Malaysia, has almost doubled every decade from 1980 to 2020, criticizing forest harvesting to increase gardens.

During this time, the average annual production of more than 7.0 % was in line with the demand.

But Malaysia’s palm oil production was stopped more than a decade ago due to a lack of space for new gardens and slow repulsion, while forest harvesting concerns have reduced growth in Indonesia.

Even in Indonesia, re -working through small holders, which produces 40 % of it, is slow. As a result, global production growth has increased by 1.0 % annually in the last four years.

Hamburg -based Forster Oil World Executive Director Analyst Thomas Melke said that in the current decade, production increases, an average of 1.3 million tonnes in a year.

Melke said that production could lose more speed than the impact of labor shortage, aging gardens and the spread of ganoderma fungus, which is damaging production.

Eliminating hesitation

Oil palms, which begin to lose productivity after 20 years, need to be replaced after 25 years, takes three to four years to produce fruits for new trees, offering non -productiveness to the land and reluctant to recover the farmers.

In February, the planting minister, Nahri Abdul Ghani, said that Malaysia reached 114,000 hectares (282,000 acres) in 2024, or only 2 % of the total area planted in 2024.

In Indonesia, in Indonesia, Gupki official Fadhil Hassan said, gradually being produced because the gardens are aging as they are older. Its raw palm oil production has dropped 11.4 % in a decade to 3.42 tonnes per hectare.

Although countries in Ivory Coast and Nigeria from Colombia and Ecuador have promoted palm oil production, industry officials say new players are growing in growing demand, especially for bio -fuel.

Both Missri and Melky demanded Indonesia to issue new permits for Palm Oil Gardens, a exercise is conducted in 2018. “If Indonesia maintains the inventor on planting, then from time to time there will be shortage of shortage and too much palm oil prices,” Masri said.

He added that limited production will result in high prices on three billion to four billion consumers in the developing world.