* Prices rise to 2,268 rgt early Thursday, highest since Jan. 22
* Indonesia moves closer to raising biodiesel subsidies
* Palm oil to end rebound around 2,248 rgt -technicals (Updates throughout, adds quotes)
By Anuradha Raghu
KUALA LUMPUR, Feb 5 (Reuters) - Malaysian palm oil futures rose more than 3 percent to a two-week high on Thursday, buoyed by hopes that a plan by the world’s top palm producer Indonesia to increase biodiesel subsidies will make blending profitable again.
The benchmark April contract rose as much as 3.1 percent to 2,268 ringgit ($636) per tonne, their highest since Jan. 22 and off a 1-1/2-month low of 2,106 ringgit reached last week. Prices then settled at 2,251 ringgit by the midday break.
Total traded volume stood at a whopping 39,725 lots of 25 tonnes, compared to the usual average of 12,500 lots.
Plans by President Joko Widodo’s government to ramp up biodiesel subsidies passed another important legislative hurdle late on Wednesday, as an influential parliamentary committee backed a near-threefold increase.
The energy parliamentary committee agreed to increase Indonesia’s biodiesel subsidy to 4,000 rupiah (32 U.S. cents) per litre from 1,500 rupiah per litre now, versus the original proposal of 5,000 rupiah per litre.
“That’s the game changer,” said a trader with a foreign commodities brokerage in Kuala Lumpur. “That’s saying that biodiesel (blending) will work again.”
A hike in subsidies could boost the use of palm oil for blending into biodiesel, a demand that dwindled after crude oil prices crashed 60 percent between June and late January.
The proposal, however, still needs approval from the parliamentary budget committee which is due to give its verdict later this month. Some market participants say the jump in palm futures on Thursday may have been overdone.
“There was some over-reaction, that’s why prices went that high,” said a second Kuala Lumpur-based trader. “The possibility is there that prices might ease back in the afternoon.”
Technicals showed that palm oil is expected to end its current rebound around a resistance at 2,248 ringgit per tonne, as indicated by its wave pattern and a Fibonacci ratio analysis, according to Reuters market analyst Wang Tao.
Meanwhile, oil prices rose on Thursday, rallying a little after big losses in the previous session, after China took steps to pour fresh liquidity into the world’s second-biggest economy to spur activity.
In other vegetable oil markets, the U.S. soyoil contract for March fell rose 0.9 percent in early Asian trade.
Palm, soy and crude oil prices at 0540 GMT Contract Month Last Change Low High Volume MY PALM OIL FEB5 2229 +36.00 2220 2229 14 MY PALM OIL MAR5 2258 +50.00 2215 2269 842 MY PALM OIL APR5 2251 +52.00 2197 2268 17759 CHINA PALM OLEIN MAY5 4802 +36.00 4736 4826 375712 CHINA SOYOIL MAY5 5458 -12.00 5410 5492 396530 CBOT SOY OIL MAR5 30.85 +9.20 30.55 30.97 3112 INDIA PALM OIL FEB5 450.40 +9.20 445.00 452.50 686 INDIA SOYOIL FEB5 628.00 +4.50 626.00 630.00 6310 NYMEX CRUDE MAR5 48.29 -0.16 48.27 49.03 14280 Palm oil prices in Malaysian ringgit per tonne CBOT soy oil in U.S. cents per pound Dalian soy oil and RBD palm olein in Chinese yuan per tonne India soy oil in Indian rupee per 10 kg Crude in U.S. dollars per barrel ($1 = 3.5670 ringgit) ($1 = 6.2552 Chinese yuan) ($1 = 61.90 Indian rupee) (Editing by Himani Sarkar and Biju Dwarakanath)