In order to cut record stockpiles and boost prices, Malaysia plans to double the palm oil content in biodiesel used for the transport sector to 20% next year. The government also plans to raise the palm oil content in biofuel for the industrial sector to 10% next year from a 7% quota being rolled out this July.
The proposed increases in the amount of palm oil mandated for biodiesel is expected to increase the use of the vegetable oil in biofuels to 1.3 million tonnes annually.
The cabinet also plans to set up a biofuel stabilisation fund that is expected to manage the price of biofuels. Indonesia uses a similar mechanism to the export levy fund.
Malaysia’s palm oil inventories fell to 3.001 million tonnes in January 2019 as demand increased and production fell. But it was still near the two-decade high of 3.22 million tonnes recorded a month earlier.
Find out more about palm oil markets at CMT’s 11th Asia Sustainable Oil Palm Summit on 12-13 September 2019 in Jakarta.