[JAKARTA] Malaysian palm oil climbed for a fourth day to a three-week high on Friday on continued optimism over Indonesia's biodiesel subsidy boost, ending the week with the benchmark's biggest weekly gain in six years.
By the close, the benchmark April contract on the Bursa Malaysia Derivatives Exchange had gained 1.51 per cent to RM2,347 (US$663) per tonne, the highest since Jan 16, after a slight correction in early trading. Traded volume was 71,547 lots of 25 tonnes, more than double the average 35,000 lots.
Palm prices also snapped three weeks of declines to climb more than 9 per cent this week, their biggest weekly gain since January 2009.
"The parliament already approved the biodiesel subsidies this afternoon. That's the reason why the market pulled back up," a trader with a foreign commodities brokerage in Kuala Lumpur told Reuters.
The Indonesian government's proposal to ramp up biodiesel subsidies overcame its final parliamentary hurdle on Friday, an Energy Ministry official said, noting the increase to 4,000 rupiah per litre could take effect next month.
Malaysian palm oil climbed 5.05 per cent on Thursday, as the market was also buoyed by hopes a plan by the world's top producer Indonesia to increase biodiesel subsidies would make blending profitable.
"Yesterday the market went up 111 points. People say maybe I should take some profit ahead of the weekend and not get too crazy. There's bound to be some selling or some profit-taking after such a rise," another Kuala Lumpur-based trader referring to the correction in early trading.
Technicals showed palm is expected to hover below RM2,326 per tonne, as it failed to break resistance at that level, said Reuters market analyst Wang Tao.
Meanwhile, Crude oil traded US$2 higher before paring gains on Friday, on track for a second weekly increase, as chaos in Libya and stronger economic signals from the United States helped futures rebound from near six-year lows.
In competing vegetable oil markets, the US soyoil contract for February gained 0.91 per cent while the most active May soybean oil contract on the Dalian Commodities Exchange rose 1.21 per cent.