Palm oil biofuel curbs from EU met with objection by Indonesian and Malaysian leaders
The leaders of Malaysia and Indonesia have signed a joint letter to object to the European Union’s plans to phase out the use of palm oil in renewable fuel.
The leaders of Malaysia and Indonesia have signed a joint letter to object to the European Union’s (EU) plans to phase out the use of palm oil in renewable fuel. This is as Malaysian palm oil futures surged to the highest in six weeks on Friday evening, on the hopes of reduced stockpiles and improved exports.
The letter to the EU which was signed by Indonesian president Joko Widodo and Malaysian prime minister Mahatir Mohamad, was sent over the weekend, said Luhut Pandjaitan, coordinating minister for maritime affairs who looks at natural resources issues in a Reuters article.
According to a statement from Malaysia’s Ministry of Primary Industries, officials from Malaysia and Indonesia will visit Brussels this week to object to the EU act that restricts the use of the edible oil in biofuel.
EU’s removal of palm oil as a green fuel sparks ire
In March, the European Commission decided that palm oil cultivation leads to excessive deforestation. The bloc had announced plans to increase its use of renewable energy sources by 2030 and said it will, when considering a renewable product, take into account its impact on deforestation.
Both Malaysia and Indonesia supply a combined 85% of the world’s palm oil.
Indonesia has previously voiced its displeasure with the EU’s decision to not consider palm oil as a green fuel and has said that it would file a World Trade Organization complaint against the bloc over the palm oil issue.
The country has also threatened to quit the Paris climate agreement – a pact which brings all nations together to combat climate change and adapt to its effects - due to this incident.
Palm oil futures hit six-week high
On Friday evening, Malaysian palm oil futures surged to their highest in six weeks, marking the fifth consecutive session of gains, as traders bank on dwindling stockpiles and improved exports.
The price of Malaysian palm oil futures has been registering steady gains since the start of this month. The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange was up 0.1 percent at RM$2,206 a tonne on Friday, compared to March 29, when it was trading at RM$2,120 a tonne.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Speculate on commodities
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
1In the case of all DFBs, there is a fixed expiry at some point in the future.
Live prices on most popular markets