The narrowing differential is making margins for biofuels production more attractive, said Rajesh Modi, a trader at Sprint Exim Pte Ltd in Singapore. Large volumes of palm oil are funneled into crop-based fuels, especially in top grower Indonesia. The country requires fuel to be mixed with 40% palm-based biodiesel, with plans to eventually raise the mandate to 50%.
(March 12): Palm oil futures extended a rally on Thursday, heading for the fifth gain in six sessions, as oil’s jump back above US$100 ($127.53) a barrel increases demand prospects for biofuel feedstocks.
Brent oil soared as much as 10% after Oman cleared all ships from its key export oil terminal and two tankers were attacked in Iraqi waters. The surge across energy markets due to the conflict in the Middle East has brought palm oil near parity — or even at a discount — to gasoil this month, compared with an average premium of US$313 per ton over the past year.
