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Malaysia and Indonesia Set Aside 40% of Palm Oil Crop for Biodiesel Production

The Star. Malaysia and Indonesia—the world’s top palm oil producers—are allocating about 40% of their combined crude palm oil output for biodiesel production, according to a statement from Malaysia’s Ministry of Plantation Industries and Commodities.

Malaysia currently produces 44% of the world’s palm oil (15.1 million tonnes of a total 34.282 million tonnes, and Indonesia produces 41.4% (14.2 million tonnes), according to the US Department of Agriculture’s Foreign Agricultural Service.

Both countries agreed to commit a targeted amount of six million tonnes of crude palm oil each annually as feedstock for the production of biofuels and biodiesel.

The move could further increase the price of edible oil, making it expensive for both food and energy users.

“Palm oil is going to become expensive and out of reach for consumers in developing nations like India, China and Pakistan,” said M.R. Chandran, an independent commodity consultant. “Palm oil will lose its attractiveness as a cheaper form of edible oil.”

Traders said companies setting up biodiesel plants had worked out the cost of palm oil at RM1,500 to RM1,600 a tonne to be viable for making biofuel. “The whole economics of palm as raw material for biofuel will change,” said an official at a leading trading company.

On the Bursa Malaysia Depository on Friday, crude palm oil futures were closing in the RM 1,550 to RM 1,600 (US$421 to US$435) per tonne range.



So palm oil is at $421 per tonne ($58 per barrel), while crude oil is at $540 per tonne ($74 per barrel).

Veg-oil has been cheaper than crude oil for some time now. Once the algae companies get producing at $15 per barrel it's game over for the crude oil people.

Joe Rocker

Is that a lot??? How does metric tons convert to barrels or gallons?


clett: I don't get it. If algae is such a good deal, why are we not seeing more developments in that area? I am not questioning the numbers, just wondering what the hold up is.


JM, the US aquatic species program managed to get 5-10,000 gallons per acre per year from algae (compare that with Palm oil at about 500 gallons per acre). They concluded that diesel from algae would cost about twice as much as fossil diesel, so canned the project. However, that was when crude oil was dirt cheap - things have changed to this situation only recently and that's why interest in algae is only just returning.

Other than that, the main issue with algae getting off the ground is the time and research it takes for a company to get involved and start pilot experiments etc. However, now that the economics are more favourable there are now several startups around the world who are making progress on this path.

Some of these players are mentioned here:



1 tonne (metric ton) = 1,000 kg (2,205 pounds)

1 tonne of palm oil = approximately 1,100 liters = 290.6 gallons = 6.92 barrels

So 12 million tonnes of set-aside = approximately 84 million barrels of palm oil, or about 3.5 billion gallons.

allen Z

clett is right. I will add the fact that in order to start constructing the necessary infrastructure in order to replace US oil imports form non-Atlantic and Western Hemisphere sources would take an investment in the order of $200 billion over 10-20 years. It may pay/ monetarily perpetuate for itself, but the initial R&D, land procurement, and scale of investment are major, major barriers. Perhaps a rolling start, with early prfits used to fund further expansion on federal land out in the US Southwest.
___In Europe, off the the northern coast/islands of Mediterranean Sea could provide the space for production. From Spain to Italy to Turkey, they could use their EEZs (exclusive economic zone) to make fuel/ biomass for energy, human/animal consumption, products, compost, and sequestation.

allen Z

Additionally, it amy be possible for this to be done (the European model) in Southeast Asia. However, they would have to contend with shipping lanes, pirates, gangs/ criminals, typhoons, and territorial/maritime border disputes.


That is another proof, that my investment idea buying a 4000 ha cropping property in Western Australia with no subsidies from the state will be a good leverage, amid much higher grain prices in the future. Food contra fuel: I love that.


Food or fuel? Soon no more cheap frying oil for KFC and McD or roadside fried banana stall!

Mr P Naidu

I would like to import palm or any other oil for the maufacture of biodiesel in South Africa. Can you please assist me or forward me to the right people to contact for pricing.This is urgent.

Mr P Naidu
Mobile : +27 82 600 6037


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Moisture & Impurities 0.25 % max.
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