Palm Oil Trades Near Six-Week High as Crude Oil Surpasses $80

Oct. 20 (Bloomberg) -- Palm oil gained for a third day and traded near its highest level in almost six weeks as crude oil exceeded $80 a barrel for the first time in more than a year, increasing palm’s attraction as an alternative fuel.

“The entire oilseed complex is upbeat about rising crude oil prices,” said Harish Galipelli, head of research at Kochi- based JRG Wealth Management, which advises traders. “Crude oil is getting costlier, which will push up demand for biofuels.”

Palm oil may climb to 2,300 to 2,350 ringgit ($685 to $700) a metric ton in the next two weeks, Galipelli said in a phone interview today. The cooking oil has gained 30 percent this year, less than half the 79 percent advance in crude.

Palm oil for January delivery rose as much as 0.9 percent to 2,216 ringgit a ton today and traded at 2,204 ringgit by the midday close at 12:30 p.m. on the Malaysia Derivatives Exchange. Crude oil was up as much as 0.6 percent to $80.05 a barrel in New York and traded at $79.75.

Soybean oil was 26 percent more expensive than palm oil, up from 9.7 percent on May 13, according to Bloomberg data, increasing the appeal of palm for cooking.

Exports of palm oil by Malaysia, the second-biggest producer, grew 1.8 percent in the first 20 days of October, independent market surveyor Intertek said today. A total of 812,095 metric tons were tracked from Oct. 1 to Oct. 20, versus 797,929 tons in the same period in September.

The 2,216 ringgit high for palm oil futures today was 4 ringgit below the 50-day moving average of 2,220 ringgit, according to data compiled by Bloomberg.

Exports from Indonesia, the largest producer, dropped 16 percent to 1.36 million tons in September from the previous month as local markets were closed for several days because of religious holidays, according to Susanto, marketing head of the Indonesian Palm Oil Association.

Shipments in the first nine months gained 16 percent to 11.4 million tons, the trade group said yesterday.