Palm climbs to four-week high on Malaysia's biodiesel plans
- Soyoil prices on the Chicago Board of Trade were up 0.41%
KUALA LUMPUR: Malaysian palm oil futures climbed to their highest in four weeks after surging nearly 2% on Tuesday, driven by optimism over Malaysia’s biodiesel plans.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange gained 88 ringgit, or 1.9%, to 4,710 ringgit ($1,189.39) a metric ton, the highest closing since April 7.
Malaysia will begin producing biodiesel with a 15% palm oil blend, hence called B15, in June to help lower diesel prices, the country’s deputy prime minister said on Monday.
The market believes that a successful B15 biodiesel implementation in Malaysia would require close to 1.5 million metric tons of crude palm oil annually, said Paramalingam Supramaniam, director at brokerage Pelindung Bestari.
Meanwhile, traders are waiting for the Malaysian Palm Oil Association’s full-month production figures for April, which are expected to serve as an indicator of output trends for the second quarter, Supramaniam said.
Soyoil prices on the Chicago Board of Trade were up 0.41%. The Dalian Commodity Exchange was closed for a holiday and will resume trading on May 6.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Brent crude futures retreated but held near $114 a barrel following fresh hostilities in the Middle East, while investors monitored developments in the U.S.-Israeli conflict with Iran.
Weaker crude oil futures make palm a less-attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, weakened 0.25% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.
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