KUALA LUMPUR: Palm oil futures climbed to near the highest level of RM2,913 in almost three years, with a rally in soybean oil, persisting concerns over supply and a robust outlook for biofuel demand prompting investors to buy.
Still, data showing palm oil exports from Malaysia, the second-biggest producer, dropped about 13% from a month earlier in the first 20 days December, helped limit gains.
Palm oil is posting solid gains for a second day, and has increased more than 2% this week, after falling 0.2% a week earlier. The world’s most-consumed cooking oil has jumped more than 50% from a four-year low in July.
The market has been supported by Indonesia’s plans to start a national biodiesel B40 mandate toward the end of next year.
The program will blend 40% palm oil with diesel, up from 20% now and 30% early next year.
Investors are concerned about palm oil supply. According to the Malaysian Palm Oil Board, output in the country fell 14% from a month earlier to 1.54 million tons in November.
The drop was bigger than the five-year historical monthly average of 8.4% for November.
Heavy rains and floods have also hurt production in December.
Palm oil for March rises as much as 1.6% to 2,919 ringgit/ton, before trading at 2,909 ringgitMost-active contract +2.3% this week.
Palm for March on Asia Pacific Exchange +1% to $724/ton.
Soybean oil’s premium to palm ~$50/ton, vs avg premium of $110 in past year: data compiled by Bloomberg.
Palm’s premium over gasoil $87/ton vs avg discount of $53 in past year:
Bloomberg data Refined palm oil for May on Dalian Commodity Exchange +2.1% to 6,052 yuan/ton. - Bloomberg
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