Palm oil advanced on speculation that demand may rebound this half as gains in crude oil boost the use of vegetable oils as biofuel feedstock.
The contract for delivery in October gained 0.7 percent to close at 2,272 ringgit ($715) a metric ton on the Bursa Malaysia Derivatives. Futures lost 5.4 in the past two weeks, extending losses in the past year to 24 percent. Palm for local physical delivery in August was at 2,335 ringgit, data compiled by Bloomberg show.
West Texas Intermediate crude rose for a fourth day on declining stockpiles. While palm production will pick up from this month, demand will also expand because of festivals in the main importing countries, said Yusof Basiron, chief executive officer of the Malaysian Palm Oil Council. Demand from large consuming countries like China and India will probably increase, Yusof said in a presentation for an online seminar today.
“One of the reasons that is pushing demand for palm oil is biodiesel,” said Sim Han Qiang, an analyst at Phillip Futures Pte. in Singapore. “When crude oil prices go up, there’ll be high demand for biodiesel.”
Increased blending requirements in the Americas and Indonesia’s foray into biodiesel as a major producer will create demand for biofuel feedstock, Yusof said.
Soybean oil for delivery in December climbed 0.6 percent to 45.57 cents a pound on the Chicago Board of Trade. Soybeans for delivery in November rose 0.2 percent to $12.7675 a bushel.
Refined palm oil for January delivery gained 0.4 percent to close at 5,616 yuan ($914) a ton on the Dalian Commodity Exchange, after closing on July 19 at the lowest price for the most-active contract since July 2009. Soybean oil advanced 0.5 percent to end at 7,256 yuan.
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