Singapore: Palm oil futures in Malaysia, the global benchmark, rose to a record high as crude oil prices rallied, boosting demand for the tropical commodity as an alternative energy source.
Palm oil often moves in the same direction as crude oil, which also gained to a record on concern Turkey may attack Kurdish militants in Iraq and disrupt shipments. Vegetable oils, including palm oil, are increasingly used in biofuels.
“People are scared about what is happening in the energy market,” said Michael Lee, trader at Marpro Oils and Grains Bhd in Kuala Lumpur. “This is the main factor.”
Palm oil for December delivery, the most-active contract, rose as much as 83 ringgit, or 3%, to 2,814 ringgit a tonne, rallying for a fifth day, on the Malaysia Derivatives Exchange (MDE).
It traded at 2,785 ringgit at 3:08 pm local time. The market was closed on Monday.
Crude oil for November delivery rose 0.7% to $86.73 (Rs3,408) a barrel in after-hours electronic trading on the New York Mercantile Exchange at 3 pm in Singapore. Oil futures reached $86.71 on Monday, the highest since being introduced in 1983.
The National Agricultural Cooperative Marketing Federation of India Ltd (Nafed), a cooperative trader, is seeking 15,000 tonnes of crude palm oil at a tender later this week to ease a domestic shortage.
India, the world’s second biggest buyer of vegetable oil, imported 23% more edible oil last month from a year earlier. Overseas purchases rose to 446,721 tonnes from 363,569 tonnes a year earlier, the Solvent Extractors’ Association said in an emailed statement on Monday in Mumbai.
India’s edible oil imports rose 11% to 4.21 million tonnes (mt) in the 11 months ended 30 September from a year earlier, said the trade body, which represents about 800 oilseed processors. Crude palm oil imports rose 32% to 2.62 mt in the period from a year ago because of lower import tax, it said.
Soybean oil and palm oil are the world’s two most-used vegetable oils, and their prices usually move in tandem. Soybean oil on the Chicago Board of Trade for December delivery rose 11 cents, or 0.3%, to 40.17 cents a pound in after-hours trading.