JAKARTA: Malaysian palm oil futures rose nearly 5 percent on Thursday to a four-year high, tracking a rally in soyoil on the Chicago Board of Trade (CBOT) on latest US government biodiesel requirements.
Weakness in the ringgit against the dollar also helped palm oil as it makes the tropical oil cheaper for foreign buyers. The Malaysian currency touched its lowest since Sept. 30, 2015, tracking slides in most government bond prices.
Benchmark palm oil futures for February delivery on the Bursa Malaysia Derivatives Exchange were up 2.2 percent at 3,020 ringgit ($677.89) a tonne at the midday break, heading for their fourth straight session of gains. Traded volumes stood at 24,633 lots of 25 tonnes each.
Palm oil futures rose as much as 4.9 percent soon after the market opened, touching their highest since September 2012, tracking the overnight soyoil market, traders said.
CBOT soyoil futures surged nearly 7 percent on Wednesday after the US government released final requirements for biofuel use for next year.
"The biodiesel requirements will boost demand for soybean oil and indirectly for palm oil as well, which is its near perfect substitute," said Adhi Tasmin, a palm analyst with Maybank Kim Eng Securities in Jakarta.
However, rising production and concerns over possible demand disruption in India may cap the rally in palm prices, Tasmin said.
Palm oil is expected to break a resistance at 2,963 ringgit per tonne and rise to the next resistance at 3,002 ringgit, Wang Tao, a Reuters market analyst for commodities and energy technicals, said.
The January soybean oil contract on the Dalian Commodity Exchange rose 2.7 percent, while the January contract for palm olein climbed 1.3 percent. Trading in Chicago is closed on Wednesday for Thanksgiving holiday.
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