Malaysia in final talks to impose 7 pct biodiesel blend -sources


By Anuradha Raghu

KUALA LUMPUR, Oct 25 (Reuters) - Malaysia is in the finalstages of discussions to impose a requirement for a higherbiodiesel blend, industry and government sources said, as thesecond-largest palm oil grower looks to whittle stocks downfurther and support prices.

The Southeast Asian country is ironing out details toincrease the palm oil component used in biodiesel to 7 percent,a B7 blend, from the current 5 percent, said an industryofficial with direct knowledge of the discussions.

"So far the direction from the ministry is quite clear.We're really moving to B7," said the official from the MalaysianBiodiesel Association who declined to be named as thediscussions were not made public.

The official said implementation was targeted for December.

A government official who also declined to be named saidMalaysia is working out final issues with car manufacturersbefore implementing the new requirement.

Malaysia's plantation industries and commodities ministrysaid in August it wants to put in place new biodiesel policiesthat will help pare down inventories and support palm prices byincreasing local consumption.

Indonesia, the top palm oil producer, recently announcedplans to raise its own minimum mandatory biofuel requirement forbiodiesel to 10 percent, up from a range of 3-10 percent.

Malaysian palm oil stocks currently stand at 1.78 milliontonnes, having eased about 30 percent from the record 2.63million tonnes hit at the end of 2012.

By Friday's midday break, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had eased0.5 percent to 2,453 ringgit ($779) per tonne afterweaker-than-expected export data fanned concerns that demand forthe tropical oil has begun to taper.($1 = 3.15 Malaysian ringgit) (Reporting by Anuradha Raghu,; Editing by Tom Hogue)

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