KUALA LUMPUR (Aug 28): Indonesia's plans for more widespread use of biodiesel could reduce its exports and global palm oil supplies, leaving Malaysia to fill in the gap in the export market, said industry analyst James Fry on Tuesday.
"That (Indonesia's biodiesel mandate) is quite a significant help towards taking surplus palm oil out of the market, and that will eventually mean that stocks come down," Fry said to reporters on the sidelines of an industry conference.
"You will find the rise in stocks in Malaysia would be slower than it would have been otherwise."
Fry also said Indonesia's implementation of its biodiesel mandate from Sept 1 will be felt in global markets.
"Very quickly if Indonesia has less to export, it will tighten the Indonesian market and it will leave a gap for Malaysia to fill."
Indonesia earlier this month announced plans to require all diesel fuel used in the nation to contain biodiesel starting from the beginning of September. Indonesia is trying to boost palm oil consumption to cut expensive fuel imports and narrow its current account gap.
Indonesia's current mandate requires a 20% bio-content in biodiesel but that is only mandatory for subsidized diesel users.
Malaysia's palm oil stocks rose 1.3% to 2.2 million tonnes at end-July.