Palm oil prices rise on the back of bargain-buying, but Indonesia's biodiesel mandate is uncertain.

Malaysian palm futures climbed on Thursday as bargain-buying?emerged following a recovery in crude oil prices.

The gains were however limited by the pressure of Dalian's weaker rival oils, and confusion about Indonesia's biodiesel blend timeline.

After a drop of more than 3% in the previous session, the benchmark palm oil contract on Bursa Derivatives Malaysia Exchange rose 29 ringgit or 0.63% to 4,615 Ringgit ($1,159.55).

Anilkumar bagani, head of commodity research at Sunvin Group in Mumbai, explained that confusion arose over Indonesia's B50 deadline - whether it applied to only subventionised entities or both, and whether it was applicable for both.

An official said that Indonesia's Energy Ministry has issued a ministerial decree setting the timeline for its biofuel blend mandate. The ministry is attempting to achieve its energy transition goals and self-sufficiency.

Bagani added that "weaker Chinese palm olein futures, soyoil, and rapeseed have also slowed down the recovery" (of palm oil prices).

Dalian's soyoil contract was down 0.68%, and its palm oil contract dropped 0.52%.

As palm oil competes to gain a share of the global vegetable oil market, it tracks the price movement of its rival edible oils.

Prices of oil rose after doubts about a fragile two-week Middle East ceasefire prompted concerns that the Strait of Hormuz, which is crucial for energy flow through the Middle East, would remain restricted.

Palm oil is a better option as a feedstock for biodiesel due to the stronger?crude futures.

The palm ringgit's currency has weakened by 0.15% versus the dollar. This makes the product slightly cheaper for buyers who hold foreign currencies.

Technical analyst Wang Tao stated that palm oil could test resistance at 4,644 per ton. A break above this level would lead to gains of up to 4,696.

(source: Reuters)