Malaysian Palm Oil Futures Fall Amid Indonesia’s B40 Biodiesel Delay

Malaysian palm oil futures closed lower on Thursday, following a sell-off triggered by uncertainty surrounding Indonesia’s delayed implementation of its B40 biodiesel mandate. The market reaction was largely due to the lack of technical regulations needed to roll out the higher biodiesel blend, which had been scheduled for January 1. Traders expressed concern that the delay would have a significant impact on the palm oil market.

A Kuala Lumpur-based trader stated, “The news definitely gave the push for market to go down. The delay will have a significant impact.”

The benchmark March delivery palm oil contract on the Bursa Malaysia Derivatives Exchange fell 2.52%, settling at 4,336 ringgit ($968.72) per metric ton, after a brief 1.8% rise earlier in the session.

In other markets, Dalian’s most-active soyoil contract saw a slight gain of 0.13%, while its palm oil contract experienced a 2.33% drop. The Chicago Board of Trade soyoil market remained closed for the New Year holiday.

Indonesia also adjusted its crude palm oil reference price for January, lowering it to $1,059.54 per ton from $1,071.67 in December, according to a trade ministry regulation published on Tuesday.

Meanwhile, Malaysian palm oil exports for December saw a decline, with AmSpec Agri Malaysia reporting a 2.5% drop, and Intertek Testing Services showing a 7.8% decrease.

The Malaysian ringgit, which is used to trade palm oil, weakened by 0.18% against the US dollar, making the commodity more affordable for buyers using foreign currencies.