Palm slips due to uncertainty about Indonesia's B50 mandate

The price of Malaysian palm oils reversed its gains on Tuesday to close lower, despite the fact that stronger competitor?oils, and positive cargo surveyor data, capped the?decline.

At the close, the benchmark March palm oil contract on Bursa Derivatives Exchange fell 27 ringgit or 0.66% to 4,063 Ringgit ($1,001.97). The contract rose 1.34% during the previous session.

A Kuala Lumpur trader said that crude palm oil prices are rising, backed by gains in competing oilseeds as well as solid January 1-10 export data. Exports of 'Malaysian Palm Oil Products for January 1-10 increased between 17.7% to 29.2% compared to a month ago, according cargo surveyors. Airlangga Hartarto said that the launch of Indonesia's B50 mandate for biodiesel will be dependent on the price difference between crude palm oil and crude oil.

Dalian's palm oil contract rose by 1.39%, while the most active soyoil contract increased by 0.18%. Chicago Board of Trade soyoil prices were up by 0.26%.

Palm oil follows the price movement of other edible oils as it competes to gain a share in the global vegetable oil market. Oil prices continued to rise as concerns about Iran, a major oil producer, and possible supply disruptions dominated the outlook for increased crude oil from Venezuela.

Palm oil is more appealing as a biodiesel source because crude oil futures are stronger. Malaysian palm oil inventories surged to near seven-year-highs in December, surpassing the psychologically significant 3-million-ton barrier. The strongest monthly production in eight years was eclipsed by only a modest recovery in exports.

Palm's trade currency, the ringgit, has strengthened by 0.12% versus the dollar. This makes the product slightly more expensive to buyers who hold foreign currencies.

(source: Reuters)