KUALA LUMPUR (Nov) 3: Palm oil surged to a three-month high on expectations that an increase in the biodiesel mandate in Malaysia and the biggest weekly rally in soybeans since 2012 will boost demand for the world’s most used cooking oil.

Futures climbed as much as 1 percent to 2,329 ringgit ($703) a ton on Bursa Malaysia Derivatives, the highest level for a most-active contract since July 14. Prices were at 2,324 ringgit by the midday break. A close at 2,315 ringgit would be 20 percent more than the 1,929 ringgit settlement on Aug. 29, meeting the common definition of a bull market.

Palm rallied from a five-year low as Indonesia and Malaysia scrapped export taxes to lure buyers amid a global glut in cooking oils. Soybeans rose 6.7 percent last week as rain slowed harvesting in the U.S. and planting were delayed in Brazil. Palm prices may jump to 2,500 ringgit by March as output drops, says Dorab Mistry, director at Godrej International Ltd. Malaysia last week said it would start the B7 biodiesel program from November which will boost the use of palm biodiesel.

“The B7 policy that was announced by the government will shift some of the inventories out of the market,” David Ng, a derivatives specialist at Phillip Futures in Kuala Lumpur, said by phone, referring to the plan under which 7 percent palm biodiesel will be blended with 93 percent petroleum diesel.

Prices slumped to 1,914 ringgit on Sept. 2, the lowest since March 2009, after falling into a bear market in July.