Palm oil surges by more than 2% in Indonesia on biodiesel hopes

The market was lifted by Indonesia's B50 biodiesel program implementation, which is slated to begin in the near future. At the close of the day, the benchmark contract for September palm oil was up 93 Ringgit or 2.07% on the Bursa Derivatives exchange at 4,578 Ringgit ($1,126). Wednesday is a public holiday at the Bursa Derivatives Market.

David Ng is a proprietary trader at Kuala Lumpur's Iceberg X Sdn Bhd. He said that the potential?rollout in Indonesia of the B50 Biodiesel Programme supports near-term sentiment. Overnight strength?in the soybean oil price further supported the market. Indonesia will implement its ethanol-blended gas along with a higher '50% biodiesel requirement from July 1.

Dalian's palm oil contract gained 1.27%, but its most active soyoil contract only rose by?0.24%. Chicago Board of Trade soyoil prices were down by 0.78%.

Palm oil follows the price movement of other edible oils as it competes to gain a share in the global vegetable oils markets. Oil prices fell to new three-month lows, as markets considered prospects for a resumption of oil supplies through the Strait of Hormuz along with weaker physical demand.

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

The ringgit (palm's trade currency) fell 0.42% in relation to the dollar. This made the commodity "cheaper" for buyers who hold foreign currencies. Malaysia has reduced its 'July crude oil reference price' to a level which maintains the export duties at 10%. This was revealed in a circular posted on the Malaysian palm oil?Board? website. Cargo surveyors estimate that exports of Malaysian products containing palm oil for the period June 1-15 rose between 9.6% to 23.8%.

(source: Reuters)