Malaysian palm oil rose on Wednesday after reports Indonesian state-owned energy company Pertamina had secured biodiesel supplies. The January benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange gained 2.3 percent to reach 2,362 ringgit ($554.07) a tonne at the end of the trading day. Traded volume stood at 59,703 lots of 25 tonnes each, well above the average 35,000 lots usually traded in a day.
Pertamina confirmed on Wednesday it would be receiving biodiesel from suppliers based on recommendations from the government, Bloomberg reported. The usage of biodiesel usually creates new demand for palm oil and supports prices. "The market is firmer today... partly on news about Indonesia. The market was waiting for news where demand could come in," said a trader based in Kuala Lumpur. "There is some covering taking place in the market today but it may come off again until there is concrete demand from China and India."
On Wednesday, the head of the Indonesian agency in charge of collecting a new levy on crude palm oil exports said the government should consider reducing the levy if prices fall below $450 a tonne. Indonesia implemented a levy on crude palm oil exports in July to fund biodiesel subsidies, as demand for the vegetable oil from top consumer China weakened on a slowing economy.
Palm oil is biased to approach a resistance at 2,373 ringgit per tonne, as indicated by a wedge, according to Reuters market analyst for commodities and energy technicals Wang Tao. In competing vegetable oil markets, the US December soyoil contract rose 1.1 percent while the January soybean oil contract on the Dalian Commodity Exchange gained 1.2 percent.
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