Palm slips on uncertainty over Indonesia’s B50 mandate

KUALA LUMPUR: Malaysian palm oil futures reversed gains to close lower on Tuesday, pressured by the uncertainty over Indonesia’s B50 biodiesel mandate, though stronger rival oils and positive cargo surveyor export data capped the decline.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange shed 27 ringgit, or 0.66%, to 4,063 ringgit ($1,001.97) a metric ton at the close. The contract gained 1.34% in the previous session.

Crude palm oil prices are trading higher, supported by gains in rival oilseeds and firm January 1-10 export data, said a Kuala Lumpur-based trader.

Cargo surveyors estimated that exports of Malaysian palm oil products for January 1-10 rose between 17.7% and 29.2% from a month earlier.

Meanwhile, the launch of Indonesia’s B50 biodiesel mandate will depend on the price gap between crude oil and crude palm oil, Airlangga Hartarto, coordinating minister for economic affairs, said.

Dalian’s most-active soyoil contract rose 0.18%, while its palm oil contract added 1.39%. Soyoil prices on the Chicago Board of Trade were up 0.26%.

Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market. Oil prices extended gains as heightened concerns surrounding major producer Iran and potential supply disruptions overshadowed the prospect of increased crude supply from

Venezuela.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock. Malaysia’s palm oil inventories surged in December to a near seven-year high, breaching the psychologically important 3-million-ton threshold, as the strongest monthly output in eight years eclipsed only a modest rebound in exports.

The ringgit, palm’s currency of trade, strengthened 0.12% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.