SINGAPORE - Shares of Singapore-listed palm oil companies jumped on Friday morning (Feb 6) on a proposal by Indonesia's government to hike biodiesel subsidies.
Shares of Golden Agri-Resources was up 2.5 cents, or 5.9 per cent, at 45 cents at about 10:45am. Wilmar International shares 7 cents or 2.2 per cent higher at $3.28. Indofood Agri Resources shares rose 2.5 cents or 3.5 per cent to 73.5 cents while First Resources was up 7.5 cents or 4 per cent to $1.95.
The Straits Times Index was up 23.03 points, or 0.68 per cent, at 3429.61.
The plan by President Joko Widodo's government to ramp up biodiesel subsidies passed another important legislative hurdle late on Wednesday, as the energy parliamentary committee backed a near-threefold hike in the subsidy to 4,000 rupiah per litre from 1,500 rupiah per litre now, Reuters reported.
A hike in subsidies could boost the use of palm oil for blending into biodiesel, a demand that dwindled after crude oil prices plunged 60 per cent between June and late January.
The proposal, however, still needs approval from Indonesia's parliamentary budget committee which is due to give its verdict later this month.
The Indonesian move sent the price of Malaysian palm oil jumping more than 5 per cent on Thursday, its biggest single-day gain since October 2010.
The benchmark April contract rose as much as 5.05 per cent to RM2,315 per tonne, its highest since Jan. 21 and off a 1-1/2-month low of RM2,106 reached last week.