Palm oil swung between gains and losses amid uncertainty over whether Indonesia will go ahead with its plan to increase biodiesel blending from 35% to 40% in January. Benchmark futures dropped as much as 1.2% and rose as much as 1.1% in Kuala Lumpur before trading at 4,354 ringgit a ton by the midday break. The tropical oil has fallen almost 6% this week and is set for its deepest losses since mid-December. Futures were being panic sold as hope faded that Indonesia’s biodiesel mandate, known as the B40 program, would absorb 1.5 million to 2 million tons of extra crude palm oil as feedstock, said a trader. The world’s biggest producer planned to increase the proportion of palm oil in its biofuel mix to 40% from the start of the year but the recent jump in prices has made the program much more expensive. The government said it aims to finalize a regulation on the B40 program this week as it is needed for producers and fuel retailers to start distributing the biodiesel. (Source:Bloomberg)
