Commodities
Asia Biofuels Update: Palm Oil Falls Along With Soybean Oil, Crude Oil
Malaysian palm oil futures slipped on Thursday as crude oil and rival soybean oil dipped, and as the local currency firmed, making exports more expensive to foreign buyers.The Bursa Malaysia Derivatives' August crude palm oil eased 0.95% to 4,485 Malaysian ringgit ($1,103.81) per metric ton. The September crude palm oil contract lost 1.01% to 4,511 ringgit/mt.Malaysian ringgit partially recovered after two sessions of losses, gaining 0.29% against the US dollar on Thursday. This dampens attractiveness of exports due to resulting higher costs.In June, Malaysian exports likely rose month over month between 10.6% and 11.1%, according to cargo surveyors. The industry body is set to release monthly data on July 10.In Indonesia, the implementation of a higher biodiesel blend of 50%, or B50, has begun in line with the applicable regulations, energy ministry official Noor Arifin Muhammad told Reuters.The government is currently preparing the revised biodiesel allocation to determine the volume of palm-based biodiesel that producers must supply to fuel retailers to produce B50, according to Indonesian Biofuel Producers Association vice chairman Catra De Thouars, as cited by the news agency.The energy ministry had initially allocated 15.6 million kiloliters of biodiesel for 2026 to meet the previous B40 mandate.Indonesia's expanding biofuel policies and weather-related supply risks are expected to support the palm oil market in H2, with analysts cited by The Star estimating prices to range between 4,000 ringgit/mt and 4,400 ringgit/mt during the period.MBSB Research reportedly expects importing countries to rebuild inventories ahead of the potential supply tightness driven by the El Nino weather phenomenon.BIMB Securities Equity Research analyst Saffa Amanina Mohd Anwar, as cited by The Edge Malaysia, projects that production of fresh fruit bunches will start to decline in late 2026, and will be severely impacted in 2027 following a time lag effect of around six to 12 months.CIMB Securities head of research Ivy Ng reportedly expects 2026 crude palm oil output to drop 2% to 3% year over year to between 19.7 million metric tons and 19.9 mmt, from 2025 production of 20.3 mmt.Plantation consultant M R Chandran, as cited by the news agency, also forecasts Malaysian output to decline to 19.7 mmt this year. Indonesian production, meanwhile, could reportedly fall to around 51 mmt from last year's 51.7 mmt.