Malaysian palm oil prices remain high, biodiesel investments on hold

The Malaysian government has delayed implementation of the Malaysian Biofuel Industry Act, better known as EnvoDiesel, due to high palm oil prices that make biodiesel production less profitable. Malaysian officials say that palm oil prices are too high at RM 2700 ($770) per tonne for EnvoDiesel to go forward at this time. The Plantation Industries and Commodities Minister said that the government would move forward to set an implementation date  if palm oil prices were to fall below RM 2000 ($572) .

The likelihood of palm oil prices falling to these levels appears remote at this time. The Malaysian Palm Oil Board (MPOB) announced that annual production of Malaysian palm oil would reach 14 million tons, 15% short of its initial estimate of 16.5 million tons. Further, while palm oil prices have risen from RM 1400 to more than RM 2600 per tonne this summer, the MPOB predicted that that prices would remain in the RM 2400 to 2700 range in the years to come.

The high prices for palm oil are likely to further stimulate interest in the cultivation of jatropha. Jatropha projects have already been announced this week in India and Myanmar.

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