EU palm-biofuel stand unlikely to hit prices

The European Union's tough stand on palm-biodiesel imports is unlikely to reduce prices and booming demand for the commodity, top analyst Dorab Mistry said on Monday. "It will simply mean that other oils will be used for biodiesel and palm will fill in the gap for edible demand," Mistry told Reuters in an interview.
The European Union is set to introduce tougher environmental criteria for biofuels, including a clampdown on palm biodiesel, after acknowledging that the drive for transport fuels produced from crops has done unforeseen damage. Palm oil, which has risen more than 10 percent this year, is off highs as weakening export numbers announced by cargo surveyors weighed on the price.
Shares of Malaysian plantation companies, which hit record highs last year, have declined in the last few days on fears of reduced demand for palm oil, used in products ranging from chocolates to body lotion and biofuel.
But Mistry said a reduction in the use of palm oil in Europe's alternative fuel market would lead to more rapeseed oil and soyabean oil being used for biodiesel. "It will mean that soyabean oil will go up even more and Indians will stop buying soyaoil completely and buy 100 percent palm oil," he told Reuters by phone from London.
"The other countries will do the same thing." The benchmark April contract on the Bursa Malaysia Derivatives Exchange fell 7 ringgit to 3,309 ringgit ($1,011) per tonne after hitting a historic high of 3,420 ringgit last week.
Exports of Malaysian palm oil products for January 1-20 fell 40.02 percent to 567,583 tonnes from 946,210 tonnes shipped between December 1 and 20, cargo surveyor Intertek Testing Services said on Monday. Another cargo surveyor, Societe Generale de Surveillance, said exports during the period fell 35.8 percent to 619,078 tonnes.
Mistry said Europe's demand for palm-biodiesel had already declined and robust demand from the food sector was mainly responsible for the price rise. "Rapeseed has gone to $1,500 a tonne and the rapeseed oil's markets in North Africa are buying soyabean oil and palm oil," he said.
"If soyabean also goes to biodiesel then they will buy palm." The global edible oils industry closely tracks price forecasts made by Mistry, a director with the Indian commodities firm Godrej International. In September, he forecast Malaysian palm oil futures to climb to 3,000 ringgit and the market reached that level on November 7.