1. The “Food vs. Fuel” Trap

Because petroleum is expensive right now due to wars in West Asia and sanctions on Russia, governments are desperately trying to replace regular diesel with biofuels made from food.

• Making Diesel from Plants: Through a chemical process called transesterification, vegetable oils (like palm or soybean) are turned into a biodiesel (known as FAME) that can run in regular diesel engines.
• Burning the Harvest: Today, about a quarter of all palm and soybean oil produced globally is burned as car fuel instead of being eaten. For example, Indonesia—the world’s biggest palm oil supplier—now mandates that 40% of their diesel must come from palm oil. This locks up millions of tonnes of oil that would normally be exported for food.

2. Weather Shocks and War Zones

On top of burning food for fuel, nature and global conflicts have severely disrupted the supply chain.

• The El Niño Effect: When the El Niño weather pattern brings extreme heat, oil palm trees drop their flowers and young fruit to survive. This doesn’t hit the market immediately; the actual drop in palm oil harvests happens 8 to 12 months later. We are feeling that delayed supply crunch right now.
• Blocked Ports in the Black Sea: Russia and Ukraine actually had great harvests of sunflower seeds. But ongoing military strikes have shut down cargo ships in the Black Sea. Forcing this oil to travel slowly over land via trains makes shipping incredibly difficult and expensive.