Malaysian palm oil futures increased for the second consecutive session on Thursday, driven by gains in Dalian vegetable oils and Indonesia’s plans to enhance its biodiesel mandate. The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange rose by 49 ringgit, or 1.31%, to 3,803 ringgit ($868.66) per metric ton by midday, reported Reuters.
Sathia Varqa, senior analyst at Fastmarkets Palm Oil Analytics, attributed the rise to Indonesia’s upcoming upgrade of its biodiesel blend to B40 and a lower production cycle in the first quarter of next year. Indonesia is set to increase its palm-based biodiesel mandate to 40% from the current 35% starting January 1, 2025, according to state news agency Antara.
Indonesia’s energy ministry tested a biodiesel blend with 40% palm oil on trains in July and plans further tests on power plants, agricultural machinery, and the shipping industry, which are expected to conclude in December before implementing the new blend.
Varqa noted that a higher biodiesel mandate will lead to increased consumption of crude palm oil (CPO) in Indonesia’s domestic market, projected at around 15 million tonnes. This will reduce the availability of CPO for exports, prompting Malaysia to explore new export markets for CPO. Meanwhile, Dalian’s palm oil contract gained 1.91%, and the most active soyoil contract rose 0.73%. Soyoil prices on the Chicago Board of Trade decreased by 0.18%. Palm oil prices are influenced by fluctuations in related oils as they compete in the global vegetable oils market.
Exports of Malaysian palm oil products for August 1-20 dropped between 16.7% and 18.4% compared to the previous month, according to data from cargo surveyors Societe Generale de Surveillance (SGS), Intertek Testing Services, and AmSpec Agri Malaysia.
Palm oil may test the resistance level of 3,782 ringgit per metric ton, with a potential breakout indicating a target of 3,809 ringgit and a possible formation of an inverted head-and-shoulders pattern.
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