VEGOILS-Palm gains higher on Chicago's soyoil, crude oil rally

By Dewi Kurniawati

JAKARTA, June 16 (Reuters) - Malaysian palm oil futures rose for the third straight session on Monday, tracking gains in Chicago soyoil after the U.S. proposed increasing biofuels blending, and supported by the crude oil rally following tensions in the Middle East.

The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange gained 156 ringgit, or 3.98%, to 4,078 ringgit ($961.79) a metric ton by the midday break.

U.S. President Donald Trump's administration on Friday proposed increasing the amount of biofuels that oil refiners must blend into the nation's fuel mix over the next two years, driven by a surge in biomass-based diesel mandates, pushing soyoil prices higher.

"The broader edible oils market tracked gains in crude oil, as investors reacted to heightened risks of conflict between Israel and Iran. Supply disruption fears lead to heightened risk premiums," said Darren Lim, commodities strategist at Singapore-based brokerage Phillip Nova.

The push in higher energy prices increases both palm oil production costs and potential demand for biofuels. In essence, the biofuel sector acts as an alternative energy source to crude oil-derived fuels, he added.

Soyoil on the Chicago Board of Trade (CBOT) BOcv1 gained 4.51%. Dalian's most-active soyoil contract DBYcv1 was up 2.57%, while its palm oil contract DCPcv1 rose 3.76%.

Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.

Oil prices were volatile on Monday after surging 7% on Friday, as renewed strikes by Israel and Iran over the weekend increased concerns that the battle could widen across the region and significantly disrupt oil exports from the Middle East.O/R

Stronger crude oil futures make palm oil a more attractive option for biodiesel feedstock.

Exports of Malaysian palm oil products for June 1-15 rose 26.3% to 662,580 metric tons from 524,596 metric tons shipped during May 1-15, cargo surveyor Intertek Testing Services said on Sunday.

Palm oil FCPOc3 still targets 3,962 ringgit ($933.33) to 3,998 ringgit range, as it has almost broken resistance at 3,927 ringgit per metric ton, according to Reuters' technical analyst Wang Tao. TECH/C

($1 = 4.2400 ringgit)