KUALA LUMPUR (Dow Jones)--Malaysia plans to introduce mandatory...

KUALA LUMPUR (Dow Jones)--Malaysia plans to introduce mandatory blending of biodiesel with diesel this year to take advantage of the recent sharp fall in crude palm oil futures and help control the current volatility in prices, Peter Chin, minister for Plantation Industries and Commodities, said late Tuesday.

He said Malaysia will also try to boost the exports of palm-based biodiesel to create a fresh demand for palm oil.

"Looking at the current trend of CPO prices, the chances of starting a biodiesel blending program this year are very high," Chin told Dow Jones Newswires in an interview.

He said discussions have already been held with biodiesel producers, who will now meet Finance Ministry officials.

"We are trying to work out a mechanism which is acceptable to all parties," said Chin.

He said the ministry currently favors 5% blending of palm-based biodiesel with diesel instead of any lower percentage.

A 5% blend will require around 500,000 metric tons of palm oil for making biodiesel when the program is fully implemented.

"The full implementation of the program may take some time but we want to at least give the green light to all stakeholders to start the process this year," said Chin.