Malaysia's benchmark palm oil contract closed unchanged on Friday, highlighting still sluggish demand as gains earlier in the day on Indonesia's plans to increase bio content in biodiesel evaporated. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed at 2,009 ringgit ($482), unchanged from a day earlier.
Earlier in the session, it rose as much as 1.1%, extending a 2.1% gain on Thursday after Indonesia, a rival palm oil-producing nation, announced plans to make it mandatory for all biodiesel to have a 30% bio-content, known as B30, from next year, up from 20% now. Industry experts have said that could push consumption of bio-content made from palm oil to as much as 9 million kilolitres (KL) per year, up from an estimated 6.2 KL in 2019.
Putting a damper on the gains was overall demand for the vegetable oil which remained sluggish, traders said. Malaysian palm fell nearly 1% for the week, its second weekly losses. The release on Monday of weak export has made the market nervous. Malaysian palm oil shipments dived more than 30% during June 1-10 versus the corresponding period last year, the data showed.
Meanwhile, edible oil refiners in India, the world's top vegetable oil buyer, have asked Prime Minister Narendra Modi to raise duty on refined palm oil imports from Malaysia to protect the local industry following a surge in inbound shipments from the Southeast Asian country, a trade body said on Friday. Technical charts suggested that the palm contract may test a support at 1,986 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
A rise above the June 13 high of 2,021 ringgit could signal the extension of the bounce towards 2,046 ringgit. In other related oils, the September soyaoil contract on the Dalian Commodity Exchange rose 0.6% and the Dalian September palm oil contract also gained 0.6%. Palm oil prices are affected by movements in related edible oils, with which it competes for a global market share.
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