Apart from a weaker ringgit, the effect of recent unfavourable weather conditions on palm-oil production and a pick-up in biofuel demand when regional biodiesel mandates gain traction, could alleviate inventory woes and support CPO prices.
KUCHING: Ratings agency RAM Ratings Services Bhd (RAM) forecasts the price of crude palm oil (CPO) to average between RM2,200 and RM2,400 per metric tonne (MT) next year from the RM2,174 per MT recorded so far in the first 10 months of 2015.
Apart from a weaker ringgit, the effect of recent unfavourable weather conditions on palm-oil production and a pick-up in biofuel demand when regional biodiesel mandates gain traction, could alleviate inventory woes and support CPO prices.
“Implemented successfully as planned, Indonesia’s higher biofuel-content mandates are envisaged to mop up about five million MT of palm oil,” it said in a statement on Tuesday. “To this end, we remain mindful of the republic’s evolving policies and minimal track record of implementation certainty, although some progress has been made.
The Indonesian Estate Crop Fund had reportedly collected four trillion rupiah since its establishment in July 2015, a portion of which has been disbursed to support the republic’s B15 ambitions and government research. Elsewhere, Indonesia’s energy and resource ministry had also engaged companies to supply up to 1.8 million kilolitres of fatty-acid methyl ester to state-owned energy company, Pertamina, between November 2015 and April 2016.
“All said, lacklustre demand growth amid a slower economic environment in key consuming countries is anticipated to continue to weigh on CPO prices. Direct competition posed by an abundant supply of soybean oil is further expected to keep CPO prices in check.”