How to trade Crude Palm Oil Futures ( FCPO ) 26 JULY 2016

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Malaysian palm oil futures reversed losses in late trade on Tuesday, in response to a stronger performance by US soybean oil, plus Malaysia's commitment to raise the minimum bio content in biodiesel, which will boost palm oil consumption.

Benchmark palm oil futures for October delivery on the Bursa Malaysia Derivatives Exchange rose 1.7% to RM2,309 (US$569) per tonne at the close of trade, its strongest daily gain since July 20.

Traded volumes stood at 48,297 lots of 25 tonnes each, above the 2015 average of 44,600.

Improvement in US soy was a likely reason, one futures trader from Kuala Lumpur said, while another trader said Malaysia's biodiesel plans could be another supportive factor.

Malaysia, the world's second largest palm producer after Indonesia, said on Tuesday it would still raise the minimum bio-content to 10% for the transport sector this year, but not in July as initially expected.

"B10 will still be implemented this year, and the market is retracing on an oversold condition," said the trader.

Malaysia had earlier said it would introduce its so-called B10 biodiesel mandate by July, a month later than earlier announced, and see its full implementation by August.

This new mandate will increase the bio content in biodiesel and use more palm oil for blending purposes, increasing demand and supporting local prices.

Palm is down 3.5% so far this month and looks set for its second monthly drop in a row as weaker performing vegetable oils weigh on market sentiment.

Last Thursday, October palm oil had climbed to a two-week top before turning back south under pressure from the weakness in Chinese palm and soy markets.

The January palm olein contract on the Dalian Commodity exchange fell 0.4%, while the January soybean oil contract declined 0.8%.

Palm oil shipments from Malaysia, the world's second-largest producer of the vegetable oil, rose about 15% during July 1-25 compared with a month earlier, according to cargo surveyor data released on Monday.

In other related vegetable oils, the Chicago soybean oil contract for December rose 1.1%.