Uncertainty over Indonesia’s B50 program weighs on palm oil prices
Malaysian palm oil futures ended lower on July 9 after several sessions of gains. The benchmark September contract on the Bursa Malaysia Derivatives Exchange fell by 15 ringgit, or 0.33%, to 4,594 ringgit ($1,127.6)/t. The market continues to be pressured by uncertainty surrounding Indonesia’s B50 biodiesel program.
According to analysts at Sunvin Group, traders are waiting for details on the allocation of quotas between subsidized and commercial participants, as well as the total volumes covered by the program. These factors will determine the additional demand for palm oil from Indonesia’s biodiesel sector.
The decline was limited by higher crude oil prices and renewed buying interest from India and China. Rising energy prices improve the competitiveness of palm oil as a biodiesel feedstock.
Additional support came from higher crude oil futures amid renewed tensions in the Middle East. Brent and WTI futures climbed to their highest levels since June 22 following reports of new US military strikes on Iran.
Movements in other vegetable oil markets were mixed. Dalian soyoil futures were little changed, while palm oil futures edged higher. On the Chicago Board of Trade, soyoil prices also increased, providing some support to the global vegetable oils market.
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