Iran Oilseeds and Vegetable Oil Factories Co-operative Co

Palm oil prices will remain supported by demand from biodiesel plants in Indonesia, despite “positive” prospects for the vegetable oil there, Sipef said – while flagging an unusual setback to its own output.

The plantations group said that the new production year for Indonesian palm oil had “started in favourable conditions”, with most of its own operations in the country enjoying “rising volumes”

“General expectations for the first quarter remain positive,” Sipef said, in comments which came hours after the US Department of Agriculture bureau in Jakarta stuck by forecasts for Indonesian output of a “strong” 38.5m tonnes for 2017-18, on an October-to-September basis.

The output forecast, a rise of 2.5m tonnes year on year, was supported by the factors of “new mature area entering full production” and “expectations for above-trend yields due to favourable weather conditions”, the bureau said.

Nonetheless, Sipef forecast that palm oil prices – which are little changed in the Kuala Lumpur futures market so far in 2018, while easing 1.9% in the key Rotterdam market – will hold their ground for now.

“We are positive that prices will remain steady, certainly for the first half of the year,” the group said.

The forecast reflected the boost to biodiesel demand prospects from improved oil prices, with Sipef saying that “the recent strong, but volatile, petro market, together with its underlying gasoil market, are certainly triggering higher mandated biodiesel volumes in Indonesia.

“We are getting very close to discretionary biodiesel blending to become economic sense in general.

“This has provided a very solid, but higher floor for palm oil,” although the group flagged “lower price expectations in the second half of the year”.

Source: agrimoney