Palm oil climbed to the highest level in more than two weeks as crude oil rose on concern that Middle East unrest will disrupt supplies, increasing the appeal of vegetable oils as biofuel feedstock.
The contract for February delivery advanced 1.2 percent to 2,459 ringgit ($803) a metric ton on the Malaysia Derivatives Exchange, the highest price at close for the most-active contract since Nov. 2. Futures climbed 3.5 percent last week, the first such gain since the five days ended Oct. 26.
Oil advanced for a second day in New York after Israeli Prime Minister Benjamin Netanyahu said yesterday that the army is prepared to “significantly widen the operation,” raising concern Middle East unrest will disrupt oil supplies. Israel will continue to attack Gaza and may intensify operations, Defense Minister Ehud Barak said.
“The rising tension in the Middle East is pushing up crude oil prices and palm oil is having some spillover effects from this,” Ker Chung Yang, an analyst at Phillip Futures Pte, said by phone from Singapore. “On the macro side, the sentiments have recovered quite a bit as the discussion on the deadlock of the fiscal cliff is going well.”
Asian stocks, commodities and the won advanced after U.S. President Barack Obama expressed confidence that he and Congress would reach a budget agreement needed to avert the so-called fiscal cliff, a combination of spending cuts and tax increases scheduled to take effect in January.
Indonesia, the biggest palm oil producer, may keep its export tax on crude palm oil at 9 percent in December, while the base-export price may be cut to $760 a ton, Susanto, head of marketing at the Indonesian Palm Oil Association, said today.
Soybean oil for delivery in January gained 1.2 percent to 47.92 cents a pound on the Chicago Board of Trade. Soybeans for January delivery climbed 0.9 percent to $13.9525 a bushel.
Palm oil for May delivery rose 1.5 percent to end at 6,772 yuan ($1,086) a ton on the Dalian Commodity Exchange. Soybean oil for the same month gained 1 percent to close at 8,450 yuan a ton.