As a result, palm oil prices should be sparking in the months ahead. In fact, forecasts are predicting up to 30% more! That expected increase is largely due to the Indonesian government’s widely reported new plan to triple down on its biodiesel mandate. Industry executives and analysts weighed in on this thrilling news, as part of the Indonesia Palm Oil Conference in Bali, November 13-14.
The conference, a key event for industry players, showcased the government’s push toward a more aggressive biodiesel policy, particularly through Jakarta’s B50 program. Through this program, 50% biodiesel is mixed with fossil fuels. It cites palm oil as a key ingredient in biodiesel production. Experts at the workshop noted that the proposed expansion, if implemented, would raise palm oil prices by as much as 10%. They anticipate an “audaciously extreme bullish impact” from this move.
The biodiesel program is the primary engine of biodiesel consumption, and thus, palm oil demand. Palm oil prices are likely to go up as gloomier than expected forecast for production increases. Industry analysts have recently sounded alarms that production challenges may raise prices even further. This would only further increase the already high value of this critical commodity in the global market.
As one of the world’s largest producers of palm oil, Indonesia has a pivotal role in this palm oil crisis. As such, changes in its policies can have far-reaching implications not only for local farmers and businesses but for international market dynamics. The Indonesia Palm Oil Conference opened up critical debate on these important issues. Increased our understanding of the linkage between federal policy and commodity market price impacts.
Palm oil industry stakeholders are already preparing for the seismic effects of these amendments. At the same time, market watchers are closely following how things play out with the greatly expanded biodiesel mandate. Strong and growing demand for biodiesel is making quite the splash in today’s market. Production growth has been too sparse, and analysts are already expecting big moves in oil prices in the months ahead.