Indonesian Forest Fires Send Palm Oil Prices Soaring Amid Supply Worries
Palm oil prices have surged due to concerns over supply disruptions caused by forest fires in Indonesia. The world's largest producer of palm oil is facing a severe haze situation, which has disrupted harvesting and affected palm fruit growth.
According to David Ng, a senior trader at Iceberg X Sdn., the market is 'concerned about the dry and hazy situation affecting output'. The commodity is also supported by higher crude and vegetable oil prices, with elevated crude prices making biofuels more competitive and boosting demand for palm oil.
The forest fires and haze are a regular occurrence in Southeast Asia, but this year's severe El Niño weather pattern has intensified and prolonged the impacts. Over 202,000ha have been burned across the Indonesian islands of Borneo and Sumatra, with pollution levels spiking both at home and in nearby countries.
The price move reflects the worsening haze situation in Indonesia, with benchmark futures climbing as much as 0.9% to RM4,975 per tonne in Kuala Lumpur.