Malaysian palm oil futures reversed earlier losses and reached a more than two-year high on Friday, supported by stronger rival oils and Indonesia's decision to cut its fossil fuel consumption.
The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange was 0.8% higher at 2,744 ringgit ($658.03) per tonne when the session closed on Friday.
The contract fell 0.2% in early trade but recovered to reach 2,782 ringgit, the highest since Nov. 13, 2017.
"Indonesian government announced an optimistic target to cut its fossil fuel consumption by boosting biodiesel demand drove prices higher," said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.
A senior Indonesian energy ministry official said on Thursday that Indonesia's plan for biodiesel to contain 30% palm-based fuel is expected to reduce fossil diesel fuel consumption by 165,000 barrels per day (bpd).
Indonesia, the world's top palm oil producer, aims to start its "B30" programme in January, expanding it from the current mandatory use of 20% bio-content in biodiesel.
Indonesia's B30 programme has sparked a palm price rally in recent months due to concerns that the top producer will have less palm oil to export.
Also supporting palm prices were costlier rival oils on the Dalian Commodities Exchange. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Dalian's January palm oil contract rose 3%, while the soyaoil contract edged up 1%.
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