KUALA: Malaysian palm oil futures rose 1.3 percent on Tuesday as traders focused on optimistic crude

markets setting the stage for growing bio-diesel demand.

Although palm oil is less likely to be channelled into Bio-fuels due to lack of government subsidies, aggressive mandates in Brazil and the United States may see more soil to taken up that leaves palm oil to dominate the food sectors.

Palm oil has been volatile like most commodities as traders trying to process whether rising crude oil, owing to the spreading Middle East unrest, will slow economic growth or fuel demand for feed-stocks that can be converted into diesel.

"The palm oil market is starting to consolidate at these levels.

The crude oil-biodiesel story is starting to heat up,"said a trader with a local commodities brokerage.