Palm's biofuel allocation uncertainty in Indonesia has dropped to a 2-month low

Malaysian palm futures dropped to their lowest level in over two months on Thursday as the market was pressured by continued uncertainty regarding Indonesia's mandate for biodiesel and lower export taxes.

The benchmark palm oil contract for July delivery at the Bursa Derivatives exchange in Malaysia fell 42 ringgit (0.95%) to 4,396 Ringgit ($1,118.58), the lowest closing price on record since March 6. Anilkumar bagani, commodity head at Sunvin Group in Mumbai, says that several key issues have not been clarified under the biofuel blend programme which includes 50% palm-oil-based fuel, announced?in April, and scheduled to be launched July 1.

The total volume of palm oil consumed for biofuels will be determined by the allocations made for participants who are subsidised or not.

Bagani also said that the possibility of a lowering in the?Indonesian export taxes on palm oil in June also pushed prices up.

He said that "there is also a?talk about India raising its edible oils import taxes to curtail the outflow of U.S. dollar." Indian Prime Minister Narendra Modi called last week on Indian families to reduce their cooking oil consumption as the surge in global energy costs following the Iran 'war' pressed the country’s foreign exchange reserves.

Dalian's palm oil contract, which is the most active contract in Dalian, fell by 1.47% while soyoil prices dropped 0.51%. Prices of soyoil on the Chicago Board of Trade fell by 0.62%.

Palm oil follows?the price movement?of rival edible oleores, as it competes to gain a share in the global vegetable oils markets. Oil prices rose as market participants remained focused on a meeting between the?U.S. The meeting between President Donald Trump and Chinese president Xi Jinping will be a chance for both to make progress in finding a solution for the 'Iran War.

Palm oil is a better option for biodiesel because crude oil futures are stronger.

The palm ringgit's trade currency, the dollar, has weakened by 0.05%, making it slightly cheaper for foreign buyers.

(source: Reuters)