SE Asian palm oil producers target U.S. biofuel market

SINGAPORE: A blending tax credit for alternative fuels has helped re-open the way for shipments of palm biodiesel to the United States, giving top producers Indonesia and Malaysia an outlet for palm oil stocks at near-record levels.

Palm oil inventories in Malaysia, the world's No. 2 producer, are down just 2 percent from a record 2.65 million tonnes hit at the end of last year.

That overhang has pushed prices of palm oil to discounts to soyoil, the main U.S. biodiesel base, while the tax credit reinstated in the world's largest energy consumer made palm biodiesel from Southeast Asia competitive to petroleum diesel.

"The U.S. is a wildcard. In 2012, there was almost zero palm-biodiesel that went into the U.S," said a Southeast Asian palm oil trader who exports palm-based biodiesel, declining to be named as he was not authorised to speak to the media.

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