BLBG: Palm Oil Advances the Most in Eight Days on Crude Oil Rally
By Claire Leow
Feb. 17 (Bloomberg) -- Palm oil gained the most in eight days after a rally in crude oil increased the appeal of biofuels made from the tropical commodity.
April-delivery palm oil added as much as 1.8 percent to 2,625 ringgit ($775) a metric ton on the Malaysia Derivatives Exchange and was at 2,617 ringgit at the 12:30 p.m. trading break.
Trading of the benchmark contract resumed after a two-day holiday marking the Chinese Lunar New Year. Crude oil in New York climbed the most in more than four months yesterday and soybean oil, the main substitute for palm oil, added 3 percent.
Palm oil remains in “a structural up-cycle” and may average 2,800 ringgit this year and 3,500 ringgit next year, “supported by a resumption of U.S. dollar weakness, higher crude oil prices and tight edible oil stocks,” Adrian Foulger, an analyst at Standard Chartered Bank, said today.
Palm oil advanced 52 percent last year as the Dollar Index fell 4.2 percent and crude oil surged 78 percent.
Crude oil in New York for March delivery surged 3.9 percent yesterday and added 0.5 percent to $77.37 at 1:17 p.m. Singapore time. The Dollar Index was little changed after falling 0.9 percent yesterday, the steepest drop since Nov. 25.
Markets in China are closed this week.
Increased demand in India and higher crude oil prices are supporting prices, which “look like stabilizing at $700-$750,” Indonesia Trade Minister Mari Pangestu said today. Indonesia is the largest producer of palm oil, mostly used in cooking.
There’s “potential increase in India’s demand due to the reduction in production of oilseeds due to the monsoons,” she said in a television interview.
Vegetable oil imports by India, the biggest user after China, climbed 10 percent in the three months ended January, reaching 2.41 million metric tons, compared with 2.19 million tons a year earlier, the Solvent Extractors’ Association of India said Feb. 15.
To contact the reporters on this story: Claire Leow in Singapore at cleow@bloomberg.net; Haslinda Amin in Singapore at hasmin1@bloomberg.net
