TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
B35 biodiesel program seen to hoist CPO prices, but only temporarily
Change Size
Workers load oil palm fresh fruit bunches onto a truck to be transported from the collector site to CPO factories in Pekanbaru, Riau, on April 27, 2022. (Reuters/Willy Kurniawan)
T
he government’s push for the mandatory 35 percent biodiesel (B35) program may boost weakening crude palm oil (CPO) prices, but probably only temporarily, market observers anticipate.
A repeat of the historic CPO spot price of 6,873 ringgit (US$1,592) per tonne and CPO futures price at 8,000 ringgit per tonne recorded in March 2022 is deemed unlikely this year, as prices have started to normalize.
Malaysia’s benchmark crude palm oil price FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange gained 58 ringgit, or 1.53 percent, to 3,853 ringgit a tonne by the midday break on Wednesday.
Girta Yoga, senior research and development executive at the Indonesia Commodity and Derivatives Exchange (ICDX), said CPO prices in 2022 had been an anomaly resulting from Indonesia’s CPO export ban and the Russian invasion of Ukraine.
Read also: Indonesia to tighten palm oil exports to shore up supply ahead of Ramadan
But the government’s B35 program, which will mandate a greater use of palm oil in the production of biodiesel, is expected to temporarily hoist CPO prices by boosting domestic CPO consumption for biodiesel to 11.44 million tonnes per year, according to Girta.
B35 is a blend consisting of 35 percent palm oil-derived fatty acid methyl ester (FAME) and 65 percent fossil fuel diesel.
