Mistry Predicts a Jump in Palm Oil on Indonesian Biofuel Mandate

Dorab Mistry, a veteran trader, said that Indonesia's mandate to use more palm oil will continue in the coming months.

Between now and the end of May, the most-consumed cooking oil can be traded between 3,500 ringgit and 5,000 ringgit a ton.

He said that the war had cast a shadow on the world economy.

In November, Mistry had predicted prices would reach as high as 4,500 ringgit a ton by March.

The war inUkraine has boosted palm oil forecasts.

The price of palm oil rose 1% to 3,918 ringgit on Friday. The vegetable oil fell to 3,336 ringgit in September.

Higher demand from the biofuel industry will support palm prices. Indonesia, the world's biggest palm oil producer, announced on Friday that it would increase its biofuel blend ratio from January.

The new mandate will require the country to use more palm oil in its biodiesel from next year. It's possible that the move will cut palm exports from the country, which accounts for a third of global oil trade.

There is more information from Mistry's presentation.

• Second-biggest grower Malaysia will produce close to 19 million tons of palm oil next year as labor shortages ease. Indonesia will produce only about 1.5 million tons more than this year.
• Indonesia may increase its biodiesel use to 40%. The South East Asian country’s B35 rule may keep palm stockpiles tight in the first half of 2023.
• Malaysian palm oil stockpiles will continue to drop until May 2023, and slip below 2 million tons.
• India’s total edible oil imports may total 14.4 million tons in 2022-23, compared with 14.2 million a year earlier. Palm oil purchases will likely climb to about 8.3 million tons from 7.93 million.
• US EPA’s announcement on biofuel mandates was a “damp squib.” The scale of the resulting sell-off surprised most of the market and soyoil’s premium to palm narrowed.