Analyst Mistry believes that the biodiesel market will continue to grow, which is expected to boost demand for palm oil.
Analyst Dorab Mistry stated on Wednesday that the price of palm oil in Malaysia is likely to increase by 12%, to $5,200 per metric ton ($1,316), as higher energy costs from the U.S./Israeli war against Iran will boost demand for?biodiesel and reduce supplies.
The benchmark palm oil contract traded on Bursa Malaysia Derivatives exchange fell 1.34% at midday on Wednesday to 4,647 Ringgit, but it has risen by about 15% since late February when the war started.
Mistry, director of Indian consumer goods firm Godrej International, stated that palm oil futures could reach 5,200 ringgit in mid-July due to biodiesel demands.
Mistry is one of the most well-respected analysts in edible oils. His forecasts of supply and price often influence markets.
Last week, global oil prices reached a record high of over $126 per barrel. The use of vegetable oil for biofuel production has become more attractive due to this rally.
Mistry stated that refined fuels such as diesel and gasoline grew more than crude oil after the Iran War began.
He said that as a result of this, the gap between fossil diesels and palm biodiesels has narrowed. This has reduced subsidy requirements, and in some markets, palm biodiesel is now cheaper than fossil fuels.
Mistry stated that rising energy prices in Indonesia prompted Indonesian to reinstate its B50 palm biodiesel program from 1 July 2026. Biodiesel mandates have been increased in Malaysia, Thailand and other countries as well.
Indonesia, the largest palm oil producer in the world, announced that it would increase the mandatory blending rate for palm-based biodiesel from 40% to 50% on July 1.
Palm oil is competing with soyoil which has been gaining in recent weeks as top producers, the U.S. Brazil and Argentina, increase its use for biofuels.
Mistry stated that "the U.S. announced its long-awaited Jumbo Biodiesel Programme for 2026 and '2027 which, as expected, has lit a fuse underneath soybean oil futures."
He said that higher prices for edible oil are causing a demand destruction in countries where they are used, such as India. Stocks have dropped and imports need to increase from June.
(source: Reuters)
