Concerns Rise as Low Palm Oil Prices May Increase Use for Biofuel

Business News/Analysis, European Union (EU), Feedstocks, Field/Orchard/Plantation Crops/Residues, Germany, Indonesia, Marketing/Market Forces and Sales, Opinions, Policy, Sustainability

June 26, 2019

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(Union zur Förderung von Oel- und Proteinpflanzen (UFOP)/Biodiesel Magazine) Selling prices for palm oil and diesel fuel have recently converged to the same level, after the former had even been at a lower price for six months. The Union zur Förderung von Oel- und Proteinpflanzen (UFOP) has drawn attention to the regulation laid down in the redrafted European Renewable Energy Directive (RED II) that specifies the reference amount of biofuels from cultivated biomass involving a high risk of changes in land use.

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UFOP fears that the use of palm oil will increase, because palm oil prices have tumbled to a very low level since January 2017, temporarily even falling below the price for diesel fuel. The main reason is the continuing rise in global supplies of vegetable oil, especially palm oil. Experts estimate that in Indonesia alone supplies will grow from 37 million metric tons in 2017 to 43 tons in the running year. The oversupply has of course led to pressure on prices. A particularly sharp decline in prices was seen in November 2018, with prices plunging to a level last seen nine years earlier, Agrarmarkt Informations-Gesellschaft (mbH) has reported.

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From UFOP’s standpoint, it would be absurd if palm oil-based fuels, of all things, would benefit from these freak changes in prices in 2019. READ MORE

Almost two-thirds of palm oil consumed in the EU is burned as energy – new data (Transportation & Environment)

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