PME was trading at $1,170-1,190/tonne (?07-812/tonne) FOB (free on board) SE (southeast) Asia on Friday, down $40/tonne from the previous week, while CPO for July delivery was at Malaysian ringgit (M$) 3,107/tonne ($1,029/tonne), slipping M$24/tonne over the same period.
CPO prices started to fall early last week after official data showed a 13.7% month-on-month spike in May production to 210,243 tonnes.
"The increase in CPO production in May has exerted downward pressure on CPO prices," a Singapore based palm oil trader said.
Over the past two weeks, CPO values have shed M$177/tonne, exerting downward pressure on PME prices.
"Ample [CPO] supply will not support current higher prices," a Malaysian palm oil producer said.
Meanwhile, PME transactions between Asia and Europe are currently being hampered by a regulation implemented by the International Sustainability Carbon Certification (ISCC) this year, requiring all biodiesel products of various origins meet its environment-friendly or “green” standards.
"The limited supply of ISCC(-approved) PME is hampering trade between Asia and Europe," a Singapore biodiesel trader added.
Germany is the first country to adopt ISCC's standards in all biodiesel imports but market players expect other EU countries to follow suit soon.
This poses a big problem to Asian PME producers since Europe is their major export market.
"Not all producers in southeast Asia are keen to be ISCC certified as it involves a lot of money and paper work," said a Singapore-based trader.
PME is used in biodiesel production.
($1 = ?.69 / $1 = M$3.02)
