Palm Oil Gains Most in More Than a Week as Crude Oil Advances

Dec. 16 (Bloomberg) -- Palm oil advanced the most in more than a week after crude oil rose for the first time in 10 days, boosting prospects of the vegetable oil as a biofuel.

Oil snapped the longest decline since 2001 yesterday as the Federal Reserve said that output at plants, mines and utilities rose 0.8 percent in November, the fourth increase in five months.

February-delivery futures gained as much as 2.5 percent to 2,588 ringgit ($756) a ton on the Malaysia Derivatives Exchange, the most since Dec. 4. The most-active contract traded at 2,574 ringgit a ton at 12:30 p.m. break in Kuala Lumpur.

“Gains in crude oil is positive for palm oil and most of the fundamental factors are supportive for prices,” Donny Khor, senior vice president for futures & options at OSK Investment Bank Bhd., said by phone from Kuala Lumpur. “Dorab Mistry’s bullish forecast is also helping the market.”

Futures may climb to 2,800 ringgit to 3,000 ringgit by the end of March, Dorab Mistry, director of Godrej International Ltd., one of India’s biggest importers of vegetable oils, told a conference in New Delhi yesterday. On Dec. 4, he predicted the commodity would reach 3,000 ringgit by the end of first quarter.

Palm oil has surged 51 percent this year on rising demand from India and China, the biggest consumers. Stockpiles fell 2 percent to 1.93 million tons from a 10-month high in October, the Malaysian Palm Oil Board said Dec. 10.

“Supplies from Malaysia this month will be negative and stockpile will not build up significantly,” OSK’s Khor said.

Indonesia Shipments

Shipments from Indonesia in November were 1.246 million tons, down from 1.347 million tons in the previous month, the Palm Oil Association said yesterday.

PT Astra Agro Lestari’s sales of crude palm oil rose by 8.1 percent to 951,203 tons in the 11 months to November, from 879,758 tons a year ago, the company said in a filing to the Indonesia Stock Exchange today.

Crude oil for January delivery traded at $70.60 a barrel, down 9 cents, in electronic trading on the New York Mercantile Exchange at 1:06 a.m. Singapore time. Yesterday, the contract rose $1.18, or 1.7 percent, to settle at $70.69.

September-delivery palm oil traded on the Dalian Commodity Exchange jumped as much as 1.9 percent to 7,030 yuan ($1,030) a ton today, the most since Dec. 7. The commodity has gained 40 percent this year.

China’s edible oil prices have increased partly because of higher global soybean prices, the commerce ministry said at a briefing in Beijing today. The government has taken measures to boost supply and large price volatilities are unlikely, spokesman Yao Jian said.