5/1/07 (Bloomberg) JAKARTA  -  Singapore will introduce a palm oil futures contract valued in dollars by the end of March to tap rising investor interest in the world's most traded vegetable oil as an alternative fuel.

The contract will be based on a physically deliverable contract at the Indonesian ports of Belawan and Dumai on the island of Sumatra, the nation's main palm oil-growing area, the Joint Asian Derivatives Exchange said.

Indonesia and Malaysia, which together control 85 per cent of world palm oil output, are promoting the use of the commodity as a fuel additive as crude oil prices have more than doubled since 2002. Palm oil can be mixed with regular petrol and diesel.

Palm oil for March delivery on the Malaysia Derivatives Exchange, the benchmark contract, fell 2.2 per cent to RM1,919 a tonne yesterday. It gained 41 per cent last year.

Average trading volume of ringgit-denominated palm oil futures almost doubled in the first half of 2006 to 10,872 contracts a day from a year earlier, according to data from Bursa Malaysia Bhd, the Malaysian exchange.

The dollar-denominated contract in Singapore will trade between 10am and 6pm, followed by a one-hour session in Chicago starting from 9:30am, the Joint Asian Derivatives Exchange said. - Bloomberg