JAKARTA: Malaysian palm oil futures gained on Friday as expectations of solid biofuel demand from rival producer Indonesia and lack of crude palm oil (CPO) sellers supported prices.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange posted a 1.1% increase to 2,030 ringgit ($487.16), as of midday market break.
The benchmark extended its gains into a second session, after it rebounded from a one-month low earlier in the week, tracking a rally in the soyoil market.
Plans by Indonesia, a rival palm oil-producing nation, to increase bio content in its mandatory biodiesel programme lent support to Malaysian market prices, a trader said.
The world's top palm oil exporter aims to make it mandatory for all biodiesel to have a 30% bio content, known as B30, from next year, up from 20% now.
"Apart from friendly news from Indonesia, market here is higher due to lack of CPO sellers," a Kuala-Lumpur based trader said.
Palm planters are not selling their crude palm oil to refiners as they seek better pricing amid a lull in production. Overall demand for the vegetable oil, however, remained sluggish.
Malaysian palm oil shipments dived more than 30% during June 1-10 versus the corresponding period last year.
Meanwhile, technical charting suggested that the palm contract may test a support at 1,986 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
A rise above the June 13 high of 2,021 ringgit could signal the extension of the bounce towards 2,046 ringgit.
In other related oils, the September soyoil contract on the Dalian Commodity Exchange rose 0.7% and the Dalian September palm oil contract gained 0.6%.
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