JAKARTA, Aug 30 — Indonesia and Malaysia, the world’s top palm oil producers, will accelerate biodiesel programmes to boost consumption after prices tumbled last month to the lowest level in more than three years.

Prices will be stabilised “through more domestic consumption and implementation of biodiesel,” Douglas Uggah Embas, Malaysia’s Plantation Industries and Commodities Minister told reporters in Kuala Lumpur today after a meeting with Suswono, Agriculture Minister for Indonesia.

Futures traded in Kuala Lumpur plunged to the lowest level since October 2009 as supplies of the world’s most-consumed cooking oil exceeded demand. Global stockpiles of the oil that’s used in everything from candy to biofuel will surge 21 per cent to a record 9.7 million metric tons by the end of 2013-2014 as demand expands 4.6 per cent, the least in 12 years, the US Department of Agriculture says.

The contract for delivery in November fell as much as 1.6 per cent to RM2,402 a metric ton and ended the morning trading session at RM2,414 on the Bursa Malaysia Derivatives. Futures, which dropped 20 per cent in the past year, are set to rise 8 per cent this month, the biggest monthly gain since December 2010.

Indonesia will increase its biodiesel blend requirements to cut spending on imports, Susilo Siswoutomo, deputy energy minister, said yesterday. The government issued a regulation increasing required biodiesel content to 10 per cent from 7.5 per cent in diesel oil sold to industrial users and motorists.

Malaysia is gradually increasing the blend of palm oil in biodiesel and in petroleum diesel to 10 per cent from 5 per cent to reduce stockpiles. Inventories have declined 37 per cent to 1.66 million tons in July from a record in December, according to data from the nation’s palm oil board.

Palm oil may average RM2,395 a ton in the third quarter and around RM2,438 in the fourth quarter as improving Chinese and US economies support prices, Embas said. — Bloomberg