PETALING JAYA: US President Joe Biden’s green energy policy, especially his supportive stance on biodiesel, is the most important factor for the vegetable oils market, opined Godrej International Ltd’s director, Dorab Mistry.
He said the catalyst came as a “terrific surprise” as there had been no hints of such a policy prior to Biden’s victory in the US presidential elecion.
“However, this has completely transformed the existing scenario and the market is very bullish that green energy will take over,” Mistry said in his paper, “Vegetable Oils Price Outlook 2021” at Bursa Malaysia’s Palm and Lauric Oils Price Outlook Conference & Exhibition on Wednesday.
“In addition, the biodiesel mandate will be fulfilled, passed and insisted upon in full; with a 100% biodiesel mandate, B100 will be available for use in the US.”
Mistry pointed out that domestic crushers in the US have taken flight and refined soyoil for July-August delivery has commanded high prices .
To illustrate the outsized demand from the US, he said the demand for soybean has resulted in Canada importing rapeseed and canola oil from Europe for domestic consumption.
With regard to the impact of biofuel on the edible oils market, ISTA Mielke GmbH (better known as Oil World) executive director Thomas Mielke noted that such policy measures are an uncertainty to watch.
In recent months, the spread between palm oil and gas oil has reached record levels with Rotterdam palm oil prices almost double the prices of gas oil futures.
“Nonetheless, biodiesel production and usage are comparatively high in Indonesia, the US and Brazil and it is rising further in the current season despite the high prices,” said Mielke.
He said it remains to be seen whether the blending mandates are being made temporarily, in the current tight supply situation, in either of the three countries. If this is done, he expects it to have a bearish impact on prices.
For 2021, ISTA Mielke projected biodiesel consumption to increase by 2.2 million tonnes with the biggest jump coming from Brazil, the US, Argentina and Indonesia. It stated that some 17.9 million tonnes of palm oil is likely to be used in biodiesel and HVO, while 12.6 million tonnes of soyoil will be used for the same purpose in this calendar year.
For 2021, ISTA Mielke forecast biodiesel consumption to increase by 2.2 million tonnes with the biggest jump coming from Brazil, the US, Argentina and Indonesia. – REUTERSPIX
