Bangkok: The Department of Internal Trade has announced a strategic plan to manage the supply of palm oil in response to increasing energy demands and declining production caused by drought conditions. The government recently adjusted the diesel formula to support the use of B7 and B20, increasing energy sector consumption to 110,000 tons per month.
According to Thai News Agency, Mr. Witayakorn Maneenet, Director-General of the Department of Internal Trade, emphasized the importance of ensuring adequate stock for both consumption and export during a subcommittee meeting focused on balanced management. With global energy prices remaining volatile and tensions in the Middle East, the department is taking measures to stabilize the situation. One such measure, requiring advance export permits since April 7th, is aimed at data management rather than acting as a trade barrier. To date, over 90,000 tons have been approved for export in April.
On the production front, the palm oil industry is facing challenges due to erratic weather, resulting in a reduction in the expected production for 2026. The Office of Agricultural Economics has lowered its May peak production estimate to 2.5 million tons, down from the previously projected 2.76 million tons. Additionally, the purchase price of palm fruit is fluctuating between 6.60 and 7.20 baht per kilogram, influenced by global crude palm oil prices and the volatility of the Thai baht. The Department of Internal Trade is urging farmers to focus on harvesting ripe palm fruit to increase oil yield, thereby allowing for better pricing and improved production efficiency.
While market mechanisms have been welcomed by the private sector and farmer representatives, there is a call for the government to strictly regulate production costs. The Palm Oil Growers Federation is pushing for an investigation into the pricing structure to ensure fairness for farmers who are facing increased fertilizer and transportation costs. The department plans to address this issue in an upcoming meeting, exploring measures such as the Green Flag Plus project to support farmers. In the energy sector, the Department of Energy Business has confirmed its plan to expand B20 sales points to 200 locations by the end of April, confident that the country's biodiesel production capacity of up to 180,000 tons per month will meet the rising demand.