KUALA LUMPUR, Sept 30: Malaysian palm oil prices jumped 0.8 per cent on Friday, capping a week of speculation of stronger demand in coming months as Europe’s thirst for biofuels grows.

A hike in Indian base import prices had little impact, with the market more focused on the potential of palm becoming a key source of alternative energy to crude oil.

Who cares about India when it buys less than 2 per cent of our oil? a trader said, referring to the once-largest importer of Malaysian palm oil.

There’s more promise for palm oil in biodiesel now and that’s what’s driving this market.

The benchmark third-month December crude palm oil futures on Bursa Malaysia Derivatives shruggd off early market caution on Friday to end up 12 ringgit at the day’s peak of 1,460 ringgit ($387.42) a ton.

It had jumped 32 ringgit, or, 2.2 per cent on the week.

Other futures contracts rose 11 to 15 ringgit.

Overall market volume grew to 5,107 lots of 25 tons each, from Thursday’s 3,594 lots. The market typically sees 6,000 lots or more on a busy day.

Demand for green fuels has risen around the world as crude oil prices spiral. Leading agricultural producers such as Malaysia, the world’s top oil palm grower, are trying to produce cheap and voluminous quantities of biodiesel to cushion the high energy prices.

Export estimates from leading cargo surveyor Societe Generale de Surveillance (SGS) on Friday showed that EU nations bought a total 197,222 tons of Malaysian palm oil in September, about 16 per cent of the month’s total.

The biggest source of biofuel in Europe now is rapeseed and palm oil is acting as the balancing factor for the edible oil its need, said another trader.

But there might come a day when palm becomes a bigger source of biodiesel for the EU than rapeseed, he added.

Dealers said demand for palm oil from food producers were also expected to pick up in coming months. Offer prices of physical crude palm oil rose 5 ringgit, following the trend in futures.

Physical crude palm oil for October saw offers at 1,460 ringgit a ton and bids at 1,450 in the southern region of Malaysia. In the central region, offers/bids stood at 1,460/1,452.50.

Trades closed at 1,450-1,455 ringgit in the south and 1,450-1,452.50 in the central zone. —Reuters