Palm oil demand drivers

New policies to curb fossil fuel consumption in countries such as Brazil, China and the United States, may lift palm oil demand for use in renewable diesel and biofuel production this year, sources said.

Elsewhere, worries about food inflation could lead to demand rationing or reductions of biofuel usage mandates, which in turn could hurt palm prices, UOB’s Kay Hian said in a note.

To tame domestic cooking oil prices, Indonesia imposed rules last week for exporters to seek approval for palm oil shipments, and is said to be drafting a plan to limit exports.

This could spur leading importer India to substitute palm oil with soy and sunflower oils as Malaysia’s supply is unlikely to bridge the shortfall in shipments from Indonesia.

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Tags: palm oil, biofuel, China, Brazil, United States, Production