Indonesia, the world's biggest producer of palm oil, raised the mandatory blend of palm oil in biodiesel to 35% starting in February, from 30% earlier, to reduce diesel fuel imports amid high global energy prices and to reduce emissions. The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange slid 24 ringgit to 4,181 ringgit a tonne on Wednesday. An El Nino episode usually results in below-average rainfall in main palm oil producers Indonesia and Malaysia, cutting yields and pushing up global prices. "It used to be palm oil is export-oriented for Indonesia, but sales are declining and domestic consumption is increasing," Fadhil said. James Fry, the chairman of commodities consultancy LMC International, however, cautioned that the correction in gasoil prices could bring down demand for biodiesel and pull-down palm oil prices.

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