Fuel talk lifts Malaysia palmoil

Fuel talk lifts Malaysia palmoil

KUALA LUMPUR (Reuters): Fresh talk about the immediate use of crude palm oil (CPO) as fuel and bullish exports data for the first 25 days of March triggered covering on Malaysia's palm oil futures, traders said on Tuesday.

"I don't know who started it, but people are now talking about Tenaga using CPO as fuel in two weeks' time. The export figures also gave a boost to the market," said one trader in Kuala Lumpur.

Officials at Tenaga Nasional Bhd, which is Malaysia's largest power firm, could not be reached for comment on Tuesday. An official at the firm said last week that Tenaga was expected to give a news conference on the issue soon.

The Malaysian government said recently it had asked Tenaga to burn 400,000 tons of CPO as fuel this year to erode a build up of excessive oil stocks in the country.

This is expected to start in April when Tenaga is scheduled to burn 50,000 tons.

But many traders said Tenaga would have to set up a plant to treat CPO to make it easy to burn, which means the government's assurance the firm could directly use the oil as fuel were out of the question.

The benchmark third-month June futures rose 34 ringgit at 864 ringgit ($227.37) a ton. Volume was heavy at 2,069 lots.

Earlier, cargo surveyor Societe Generale de Surveillance Malaysia Sdn Bhd (SGS) said Malaysian palm oil exports in the first 25 days of March were at 780,762 tons against 717,737 for the same period in February.

SGS said it estimated the exports from the shipment of 150,196 tons of RBD palm oil, 299,750 tons of RBD palm olein and 43,449 tons of RBD palm stearin tracked during the period.

Physical March (south and central) was offered at 835 ringgit against bids of 830. Trade was reported at 825 to 830 for both regions.

April (south and central) was offered at 835 ringgit and bid at 830, and trade was reported at 825 to 830 for both regions.