Malaysian palm oil futures rise on Dalian strength, Indonesia biodiesel plan

JAKARTA: Malaysian palm oil futures rose for a second straight session on Thursday, underpinned by gains in Dalian vegetable oils and Indonesia’s plans to boost its biodiesel mandate. The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange gained 49 ringgit, or 1.31%, to 3,803 ringgit ($868.66) a metric ton by midday.

“Indonesia biodiesel blend upgrade to B40 and lower production cycle in the first quarter (next year) is supporting the contract higher,” said Sathia Varqa, senior analyst with Fastmarkets Palm Oil Analytics. Indonesia planned to raise its palm-based biodiesel mandate to 40% starting Jan. 1 2025 from currently 35%, state news agency Antara reported.

Indonesia’s energy ministry tested biodiesel mixed with 40% palm oil-based fuel on trains in July and is planning several other tests on power plants, agriculture machinery and the shipping industry, which is expected to be concluded in December, before raising the blend.

“A higher biodiesel mandate means higher consumption of CPO within the domestic Indonesian market, expected to be around 15 million tonnes, resulting in less availability for exports, leaving Malaysia to expand and penetrate new CPO export markets,” he added. Dalian’s palm oil contract gained 1.91%, while the most active soyoil contract was up 0.73%. Soyoil prices on the Chicago Board of Trade fell 0.18%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Exports of Malaysian palm oil products for Aug. 1-20 fell between 16.7% and 18.4% from a month earlier, data from cargo surveyors Societe Generale de Surveillance (SGS), Intertek Testing Services and AmSpec Agri Malaysia showed.

Palm oil may retest resistance of 3,782 ringgit per metric ton, a break above could confirm both a target of 3,809 ringgit and an inverted head-and-shoulders.