KUALA LUMPUR: Malaysian palm oil futures climbed more than 2 percent on Tuesday, ahead of a public holiday, snapping two straight sessions of losses, as Indonesia’s looming B50 biodiesel programme implementation lifted the market.
The benchmark palm oil contract for September delivery was up 93 ringgit, or 2.07 percent, on the Bursa Malaysia Derivatives Exchange at 4,578 ringgit (USD1,126) a metric ton at the close.
The Bursa Malaysia Derivatives Exchange will be closed on Wednesday for a public holiday.
The potential rollout of the B50 biodiesel programme in Indonesia is supporting near-term sentiment, while overnight strength in soybean oil prices further supported the market, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd. Indonesia will begin implementing its ethanol-blended gasoline alongside a higher 50 percent biodiesel mandate from July 1.
Dalian’s most-active soyoil contract rose 0.24 percent, while its palm oil contract gained 1.27 percent. Soyoil prices on the Chicago Board of Trade were down 0.78 percent.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market. Oil prices slid to fresh three-month lows as markets weighed prospects for a resumption of supplies through the Strait of Hormuz alongside weaker physical demand and scant details on a preliminary deal to end the Iran war.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, weakened 0.42 percent against the dollar, making the commodity cheaper for buyers holding foreign currencies.
Malaysia has lowered its July crude palm oil reference price to a level that maintains the export duty at 10 percent, a circular on the Malaysian Palm Oil Board website showed. Cargo surveyors estimated that exports of Malaysian palm oil products for the June 1-15 period rose between 9.6 percent and 23.8 percent.
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