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Palm oil registers weekly drop despite support from Indonesia biodiesel
[KUALA LUMPUR] Malaysian palm oil futures ended higher on Friday on prospects that top producer Indonesia will blend more palm into biodiesel this year, though concerns over dwindling demand still dragged the contract to its biggest weekly drop in a month.
Indonesia's chief economic minister said on Friday that it will increase the minimum bio content in diesel for transport to 15 percent from the 10 per cent in a move to cut costly diesel imports.
"This is worthy news that saw short-covering at the close," said one trader with a Malaysian commodities brokerage.
The benchmark May contract on the Bursa Malaysia Derivatives Exchange had pulled up 0.2 percent to end Friday at RM2,247 (S$842) a tonne, reversing losses in the morning session.
Total traded volume was 32,319 lots of 25 tonnes, against the usual 35,000 lots.
Traders had said that the market was hunting for clearer price direction after data from Malaysia's industry regulator and cargo surveyors pointed to weak February and March exports.
A second Kuala Lumpur trader sees benchmak palm's near-term support at RM2,220 and immediate resistance at RM2,270.
The dissapointing overseas sales of palm oil from Malaysia, the world's No 2 producer, have sparked worries of whether price-sensitive buyers will continue to move away from the tropical oil in favour of soyoil, a common food and fuel substitute.
Palm imports by India, the world's top buyer of edible oil, fell 23 per cent to 509,948 tonnes in February, data from the Solvent Extractors' Association of India (SEA) showed on Friday.
Malaysian palm oil prices, which set the tone for global prices, declined 1.8 per cent over the week.
In competing vegetable oil markets, the most active September soybean oil contract on the Dalian Commodity Exchange fell 0.4 per cent in late Asian trade, while the US soyoil contract for May rose 0.5 per cent.
In other markets, Brent crude oil slipped to less than US$57 a barrel after the West's energy watchdog said that a global oil glut was building with US oil production showing no signs of slowing.