KResearch is of the view that prices of Thai oil palm will stay at an elevated level of THB7.5-9.5/kg during 1Q22 in line with high global crude palm oil and energy prices. Meanwhile, an adjustment to the mixture of biodiesel to B5, with the aim of stabilizing domestic oil prices during February-March may affect demand for oil palm by approximately 320,000 tons, and this may in turn cause domestic oil palm prices to drop from their peak of THB10.3/kg recorded in January 2022.
Looking ahead, close attention must be paid to the outlook for global crude palm oil and energy prices, particularly the impact of the Russia-Ukraine conflict on domestic energy and oil palm prices, plus the future biodiesel blend ratio. As a result, it is expected that prices of Thai oil palm may decline to a range of THB4.5-6.5/kg during 2Q22 in line with higher oil palm outputs while demand will remain uncertain due to the selection of a biodiesel formula that rests primarily with global crude oil prices. In spite of this, the average oil palm price will likely stay above the guaranteed price at THB4/kg.