While Indonesian authorities have attributed lower-than-targeted biodiesel use to a lack of blending and handling facilities, Mr. Mistry said the "real reason" is more likely generally high palm-oil prices this year which have limited biofuel demand.
...At MYR2,700/ton, for instance, BMD palm oil won't be competitive unless Brent crude oil prices climb to $125 a barrel. "If energy prices do not climb so high at MRY2,700/ton Indonesia will dramatically reduce palm bio diesel consumption," he said. Brent oil is currently around $114/bbl.
Palm "desperately needs to regain its competitiveness" with refined, bleach and deodorized palm olein needing to fall $120 below soyoil prices in the high-production and high-demand months of August, September and October, Mr. Mistry said.
... "Palm has become far too dependent on biodiesel demand and that is an unreliable, opportunistic and sporadic market. Palm must fight for market share of edible food demand," Mr. Mistry, who is also a London-based director at Godrej International Ltd., said.
... "Demand will be good at the lower end of [this MYR2,300-MYR2,500/ton] range. At the upper end at MYR2,500/ton Malaysian stocks will soon exceed 2 million tons and work their way to a peak of almost 2.5 million tons by November," Mr. Mistry said.
... Mr. Mistry maintains his forecast for Indonesia palm-oil production to be 30.5 million tons this year--up 11% year over year from 27.5 million tons. Malaysia will produce between 19.7 million tons and 19.9 million tons of palm oil this year, he added...
Telequote News excerpts from Dow Jones Newswires...
Write to Huileng Tan at huileng.tan@wsj.com