KUALA LUMPUR: Malaysian palm oil futures rose to a three-month high on Wednesday, fuelled by a rally in crude futures and top producer Indonesia implementing new rules to control exports of the edible oil.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange was up 135 ringgit, or 2.68%, at 5,169 ringgit ($1,233.36) a tonne by the midday break.
Earlier in the day, it rose as much 3.2% to its highest since Oct. 21.
Indonesia, world's biggest palm oil producer, said on Tuesday it will require exporters to obtain permits for their shipments and ask producers to declare how much palm oil they plan to sell domestically, amid efforts to control soaring cooking oil prices.
The country's biggest palm oil association GAPKI shrugged off the new policy, saying that it would have no impact on exports.
Palm oil gains over 1pc as Indonesia plans B40 biodiesel tests
Indonesia's policy will reduce Indonesian supply; along with higher crude prices that triggered a buying spree, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Oil prices rose to a seven-year high as an outage on a pipeline from Iraq to Turkey increased concerns about an already tight supply outlook.
Stronger crude prices make palm a more attractive option for biodiesel feedstock.
Dalian's most-active soyoil contract rose 1.3%, while its palm oil contract gained 2.4%. Soyoil prices on the Chicago Board of Trade were up 1%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
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