29/04/2011 (Bloomberg) - Palm oil advanced for the first time in four days on speculation importers led by India may boost purchases, and as a gain in crude oil increased the appeal of the vegetable oil as a biofuel.

The July-delivery contract increased as much as 1.4 percent to 3,324 ringgit ($1,122) a metric ton on the Malaysia Derivatives Exchange and was at 3,322 ringgit at 3:36 p.m. in Kuala Lumpur. Futures fell 2.8 percent in the previous three sessions.

“Now that the winter season is over, palm oil demand seasonally picks up from India, Pakistan and Bangladesh,” Vijay Mehta, director at Commodity Links Pte., said by phone from Singapore. “We’ll see a lot of improvement in the export figures for the first half of May as exports are really picking up both from Malaysia and Indonesia. Demand is very strong.”

Palm oil exports from Malaysia fell in the first 25 days of this month from the same period in March as the tendency of the cooking oil to cloud in winter cooled demand. Shipments dropped 7.7 percent to 865,593 tons, independent market surveyor Intertek said April 25.

China will continue to buy more Malaysian palm oil, Chinese Premier Wen Jiabao said today in Putrajaya, outside Kuala Lumpur. China is the second-biggest importer of palm oil after India.

Malaysia’s palm-oil production may rise to 18.4 million tons in the year beginning Oct. 1, from 17.8 million in the current year, according to a unit of the U.S. Department of Agriculture. Exports may drop to 16.55 million tons, from 17 million, the USDA’s Foreign Agricultural Service said in a report posted on its website yesterday.

‘Well Supported’
Rival soybean oil is “very well-supported” because soaring crude prices boost demand for vegetable oils used for alternative fuel, Mehta said.

Crude oil climbed for a second day on speculation that demand will increase after the Federal Reserve renewed its pledge to stimulate growth and U.S. gasoline stockpiles declined. The Dollar Index fell to the lowest since 2008 and Asian stocks rose after the Federal Reserve renewed its pledge to keep interest rates near zero.

“A weaker dollar and rising energy prices helped palm oil stage a recovery in the near-term, which could be short-lived,” Gnanasekar Thiagarajan, director of Mumbai-based Commtrendz Risk Management Services Pvt., said in a technical analysis today.

Crude Gains
Crude oil for June delivery gained as much as 94 cents, or 0.8 percent, to $113.70 a barrel in New York, the highest since Sept. 22, 2008. The contract was at $113.24 at 3:45 p.m. Singapore time.

The Dollar Index, which tracks the U.S. currency against those of six major trading partners, sank 0.7 percent to 73.016 as of 3:09 p.m. Singapore time.

Soybeans for July delivery rose as much as 1.1 percent to $13.99 a bushel in Chicago and last traded at $13.95. Soybean oil for delivery in the same month gained as much as 1 percent to 59.02 cents a pound.

January-delivery palm oil on the Dalian Commodity Exchange advanced 1.7 percent to close at 9,294 yuan ($1,429) a ton. Soybean oil for delivery in the same month increased 1.3 percent to 10,356 yuan a ton at the close.

CME Group Inc.’s most-active July palm-oil contract, pegged to the Malaysian benchmark, climbed 1.7 percent to $1,120.50 a ton at 3:10 p.m. Singapore time.