Palm oil closes strong in Indonesian biodiesel plans and Dalian oils

Malaysian palm futures closed at their highest level in seven months on Thursday. This was due to the strength of rival Dalian oil and Indonesia's plans for biodiesel. Profit-taking ahead of Malaysia Palm Oil Board (MPOB's) monthly data is expected.

The benchmark palm-oil contract for December delivery at the Bursa Derivatives exchange in Malaysia rose 49 ringgit or 1.08% to 4,594 Ringgit ($1,090.18) per metric tonne - its highest close since the 7th of March.

For the third session in a row, the contract recorded gains.

Paramalingam Supramaniam of Selangor's brokerage Pelindung Bestari said that the palm oil market has rallied in response to recent bullish developments including Indonesia's mandate for B50 biodiesel and higher opening rates at China's Dalian Exchange.

He said that the rally was vulnerable now without new catalysts.

He added that traders are likely to take positions ahead of upcoming MPOB demand and supply data. Demand has also begun to wane in response to rising prices, creating potential headwinds for the market near-term.

Indonesia has pushed ahead with its plan for biodiesel that contains 50% palm oil-based fuel, or B50. This is in an effort to reduce gasoil imports.

Dalian's palm oil contract, which is the most active contract in Dalian, rose by 4.13%. Chicago Board of Trade soyoil prices were down by 0.06%.

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

After the National Day holidays from October 1-8, trading resumed on Chinese markets.

Oil prices remained unchanged as investors weighed the impact of a ceasefire agreement in Gaza, which could ease tensions across the Middle East, against the stalled peace negotiations in Ukraine. These talks could result in sanctions being imposed on Russia or limiting its exports.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

The dollar's value against the ringgit remained unchanged. The ringgit, the currency of trade for palm, remained unchanged against the U.S. dollar.

(source: Reuters)