Palm logs second week of gains on US plans for finalising biofuel quotas

Malaysian palm futures ended Friday more than 2% higher and recorded a second week of gains, boosted by the strength in soybean oil following U.S. plans for finalising biofuel quotas.

The benchmark palm oil contract for April delivery at Bursa Derivatives Exchange climbed 81 ringgit or 2.03% to 4,071 Ringgit ($1,003.95) per metric ton.

This week, the contract increased by 0.87%.

Markets traded higher due to soybean oil gains amidst news that the Trump Administration would release biofuel quotas for 2026 by March of this?year. This could lead to more demand for biofuels made from soybean oil, according David Ng, a 'proprietary trader' at Kuala Lumpur based trading firm Iceberg X Sdn BHd.

According to sources familiar with U.S. plans, the U.S. will keep its biofuel quotas near to their initial proposal, which would see a rise in?total biofuel blending volume?from levels of 2025, and drop a plan that penalised imports for renewable fuels.

Dalian's palm oil contract, which is the most active contract, increased by 0.58%. Chicago Board of Trade soyoil prices rose by 0.49%.

As palm oil competes to gain a share in the global vegetable oils market, it tracks the price fluctuations of competing edible oils.

The cargo surveyors' estimated exports of palm oil products from Malaysia for the period January 1-15 also helped to boost prices. These rose between 17.5% and 18% month-on-month.

The ringgit, which is the palm's currency of trade, has weakened by 0.07% against dollars, making the commodity slightly cheaper to buyers who hold foreign currencies.

The oil price rose a little as participants on the market weighed their concerns about supply risks. However, the likelihood of an American strike against Iran has decreased.

Palm oil is a better option as a biodiesel source because crude oil futures are stronger. ($1 = 4.0550 ringgit)

(source: Reuters)