Malaysia’s palm oil plantation major SD Guthrie Berhad expects crude palm oil prices to remain steady at around 4,000 ringgit ($946.52) for the rest of the year with support from Indonesia’s biodiesel mandate, it said on Thursday.

Malaysia’s benchmark crude palm oil prices traded at 4,247 ringgit a ton on Thursday afternoon, compared to about 4,300 to 4,500 ringgit in the beginning of the year. The decline is attributed to a production rise in top producers Indonesia and Malaysia.

However, Indonesia’s decision to fully implement its B40 biodiesel mandate – that will contain 40% palm oil – provided support.

SD Guthrie Berhad’s managing director, Mohamad Helmy Othman Basha, said prices will continue to hold steady on expectations that the biodiesel mandate would continue to offer support.

The company, based in Kuala Lumpur with operations in Indonesia, Papua New Guinea and Solomon Islands, posted a second-quarter profit of 505 million ringgit ($119.44 million), up 22% from a year ago.

Its revenue rose to 5.169 billion ringgit from 4.965 billion ringgit.

The company stated that it benefitted primarily from its upstream segment and higher year-on-year average crude palm oil and palm kernel prices, while its fresh fruit bunch production also increased 4%.

In its downstream segment, profit before interest and tax declined to 126 million ringgit from 225 million ringgit as lower demand and tighter margins hit Asia Pacific and Europe operations.

Separately, on whether the Indonesian authorities had seized their plantations, Mohamad Helmy said less than 3% of its total planted area in the country was affected.

“We don’t believe we have contravened anything,” he said, adding they were in talks with the government.

Indonesian authorities say they have cracked down on plantations operating illegally in designated forest areas.
Source: Reuters