The proposal “is supportive of edible oil demand and crude palm oil prices, as the biodiesel mandate will help sustain US consumption of edible oils,” CIMB Securities analysts Ivy Ng Lee Fang and Lim Yue Jia said in a note.
Palm Oil Rallies Above 4,000 Ringgit Level | Surge in soy oil and crude boosts biofuel appeal
Chicago soy oil extended gains on Monday after surging more than 6% on Friday, putting it on track for the biggest two-day jump in almost three years. Palm futures surged as much as 4.1% in Kuala Lumpur.
See also: Oil jump above US$130 would reverse bets on Fed rate cuts
The rally in crude oil prices due to the conflict in the Middle East is also buoying palm. Global benchmark Brent extended gains on Monday after surging 7% on Friday. Investors are bracing for any attacks on energy infrastructure and shipping in a region that produces around a third of the world’s crude.
“A potential escalation could disrupt oil supplies, pushing energy prices higher and increasing both the cost of palm oil production and demand for biofuels,” said Darren Lim, a commodities strategist at Phillip Nova Pte. “Biofuels become more competitive when crude prices rise, often prompting shifts in demand away from petroleum-based fuels,” he said in a note.
