Singapore: The tide is turning in favour of palm oil-based biodiesel producers, who aim to raise output in coming months because of improving margins after a near-50% drop in palm oil prices from their record high six months ago.
Industry analysts attending a three-day conference said this would prevent crude palm oil prices from falling much below 2,300 ringgit (Rs30,000) a tonne on the Bursa Malaysia Derivatives Exchange, from the current level of 2,376 ringgit.
“Biofuels have become attractive again, that is one thing which will support prices,” James Fry, chairman of LMC International Ltd, said on the sidelines of the conference.
Palm oil hit a record high of 4,486 ringgit a tonne in March and crude oil hit a record over $147 (Rs6,600 now) a barrel in mid-July, prompting small biodiesel producers to halt operations in the past few months and the big producers to cut production sharply.
But margins for the region’s biofuel producers have turned positive again, with crude oil easing to about $105 and palm oil easing at a relatively faster rate to around $700, increasing the spread between crude oil and palm oil in recent weeks.