Thailand: Biodiesel squeezes palm supply

Palm oil prices have jumped sharply in recent months, leading authorities to consider a ban on exports. Palm oil is a raw material for cooking oil, the food industry and as an alternative fuel.

A Commerce Ministry panel that monitors palm oil prices yesterday recommended that the government import 30,000 tonnes of crude olein, the liquid component of palm kernel oil, to ease supply shortages. The proposal will be considered today by the Edible Oil Policy Board, chaired by Commerce Minister Krirk-krai Jirapaet.
But the Palm Oil and Oil Palm Association and the Palm Oil Crushing Mill Association have come out against the proposal as doing little to address current problems.

The mandatory introduction of biodiesel next month has had little impact on crude palm oil supplies, insists Chaiwat Churit, a senior executive vice-president of PTT Plc. The Energy Ministry plans to make B2 biodiesel, a blend of 2% biofuel and diesel, the universal standard starting from Feb 2.

Mr Chaiwat said the introduction of biodiesel would have only a minor impact on the palm oil market.

Thavee Srisukon, the president of the Palm Oil and Oil Palm Association, said crude olein in Malaysia was now quoted at 35 baht per kilogramme. After transport costs, insurance and tariffs are included, import prices differed little from domestic prices, which in any case had moved upward in line with global prices.

One industry executive suggested that supply constraints were the fault of the Commerce Ministry itself, which should have anticipated the price impact of rising demand for biofuel production and exports.

Crude palm oil reserves last week fell to 86,000 tonnes, down from 98,000 in December and 150,000 last June.

Bangkok Post