Palm oil prices could climb about 12% to around 5,200 ringgits (US$1,329) per metric ton by mid-July, citing forecasts from Dorab Mistry, a global analyst and director at Indian consumer goods company Godrej International.
The expected rise in prices for the world’s most widely consumed edible oil is being driven largely by renewed interest in biodiesel programmes amid tensions linked to the Iran conflict.
Higher crude oil prices have made palm oil more attractive as a biodiesel feedstock compared with conventional fuels.
Indonesia announced in late March plans to raise the palm oil content in its diesel blend from 40% (B40) to 50% (B50) starting in July. Malaysia, meanwhile, plans to begin producing a biodiesel blend containing 15% palm oil, known as B15, in June as part of efforts to lower domestic diesel prices.
According to Mistry, prices could reach 5,000 ringgits by June. Palm oil prices have already risen about 15% since the conflict escalated earlier this year. Analysts also point to higher biofuel blending requirements in the United States as another factor supporting prices.
Under targets set by the Environmental Protection Agency (EPA), U.S. biodiesel producers using soybean oil are expected to increase output by more than 60% this year. That could reduce available export supplies of soy oil and support palm oil prices, as the two oils compete directly in the global vegetable oils market.
