BIODIESEL – OPIEJ

Strengthening the Malaysian Palm Oil-based Biodiesel Industry: Solving Current Issues and Impact on CPO Prices

mpob_admin — Tue, 28 Aug 2018 13:58:38 +0000

The palm oil-based biodiesel industry can be considered as a ‘golden egg’ of the Malaysian palm oil supply chain. This is due to the role it plays in improving price scenario of crude palm oil (CPO) as well as creating value addition for palm oil products. This benefits all subsectors in the Malaysian palm oil supply chain. Based on the last four years scenario, total additional income received by oil palm growers was RM 20.835 billion. This scenario adds up another RM 61.50/t or 16% in support of fresh fruit bunch (FFB) prices. Meanwhile, under the Bx implementation programme, price of CPO is estimated to increase by RM 13/t if B1 programme implemented were to be. If the production of palm methyl ester (PME) increased to 0.3 million tonnes (B3) the price of CPO is expected to increase by RM 55/t. The aggressive implementation of biodiesel blending at 5% (B5) would result in the price of CPO to increase by RM 120/t. However, although still at infancy stage, the palm oil-based biodiesel industry has already faced a few challenges. These challenges can be either within the oil palm industry itself or outside the industry. The analysis on cost of PME production in 2009 shows that biodiesel industry is still not viable as producers cannot fully recover depreciation in their operation due to the problem of overcapacity. Meanwhile, the main challenge is the implementation of the Bx programme for the local market. It can be a ’key‘ to the success of the Malaysian biodiesel industry in particular and the whole industry in general. Meanwhile, the challenge from outside the market is beyond the control of the industry as it is difficult to be solved. The challenge is related to rules and regulations from importing countries in order to protect their own products. Meanwhile, palm oil industry itself should always produce palm oil products in a sustainable manner at all levels of production to ensure this industry can sustain in the future.

World Biodiesel Viability Amidst High Feedstock Prices

mpob_admin — Tue, 28 Aug 2018 05:29:44 +0000

Conventional economics says the price of crude palm oil (CPO) has an inverse relationship with stock. In the past two years, however, the economics of world oils and fats had changed, resulting in both prices and stocks rising in tandem, thus defying traditional economic theory. There are now strong signs of a linkage between the fuel price and the CPO price, which is created by the new role played by biodiesel. The article suggests that, when analysing the palm oil price, one now has to take into account of two factors, namely the petroleum price and the level of oil stocks. The petroleum price determines the price band within which palm oil will trade, while the stock level determines how high or low palm oil prices will lie within the trading range.

Recent Development in the World Palm Oil Prices: An Overview

mpob_admin — Tue, 28 Aug 2018 05:21:32 +0000

In the past, there have been spikes in the palm oil price, mainly due to the demand and supply imbalance of oils and fats, in particular, that for soyabean oil. However, since mid 2006, the month-to-month spikes have become more pronounced and sustained, and been attributed not only to the overall supply and demand imbalance of edible oils and fats but also to the increasing demand for the oils as fuel. This development has shifted the demand curve for palm oil to the right. In this article, the impacts of the trend will be accessed on the consumption, trade, price competitiveness, investment in oil palm/palm oil and the use of palm oil for producing biodiesel.

Impact of Commercialization of Biofuel on Prices of Related Commodities

mpob_admin — Tue, 28 Aug 2018 04:57:13 +0000

This paper examines the use of vegetable oils and sugar for biofuel in selected countries, as a price stabilization mechanism in the EU, USA and Brazil. Two scenarios; one before and the other after the advent of the biofuel programme were analysed for soyabean, rapeseed, sugar and corn prices. Correlations between the price and production of biofuel for the selected vegetable oils were high and showed positive relationship after commercializing of the biofuel. This means that the biofuel programme had improved the prices for the selected vegetable oils. The index from the ARCH and GARCH models were much higher and the linear trend of selected vegetable oil prices showed a downward trend prior to commercialization. However, after their use as biofuel, the index became much lower and the linear trend of selected vegetable oil prices showed an upward trend. This means that, after commercializing the biofuel, prices stabilized and slowly increased. The findings indicate that the biofuel programme can remove excess production to new uses and improve prices. Hence, it can be deduced that removal of palm oil from the market and put to new uses (biofuel) could improve palm oil price. Therefore, it is strongly suggested that Malaysia should commercialize biofuel from palm oil.