13/09/2010 (Bloomberg) - Palm oil climbed to the highest level in almost a month after a rally in crude oil lifted the appeal of the vegetable oil as a feedstock for biodiesel and higher than estimated industrial production in China boosted optimism in a global economic recovery.

November-delivery futures advanced as much as 1.6 percent to 2,689 ringgit ($867) a metric ton before closing at 2,676 ringgit on the Malaysia Derivatives Exchange in Kuala Lumpur. The price gained 2.9 percent last week. The market was closed Sept. 10 for the Muslim Eid holiday.

“Crude oil has rallied smartly and that’s supporting palm oil,” Sandeep Bajoria, chief executive of Sunwin Group, said in Mumbai. “Though palm oil is entering the peak production season, external markets like crude and strong equities will continue to support palm oil.”

Oil rose for a second day in New York on expectations fuel demand will climb in the U.S. and China, the two largest crude consumers. Asian stocks rose, driving the region’s benchmark index to a four-month high as higher-than-estimated industrial output in China boosted optimism in a global economic recovery.

Crude for October delivery rose as much as 1.4 percent to $77.50 a barrel in electronic trading on the New York Mercantile Exchange, and traded at $77.34 at 5:23 p.m. Singapore time. The MSCI Asia Pacific Index added 1.4 percent to 123.50 as of 4:05 p.m. in Tokyo, the highest level since May 4.

“Exports from Malaysia will show an increase this month and a tight soybean oil market will continue to help palm oil move up,” said Bajoria. Palm oil prices may reach 2,800 ringgit in the next few weeks, he said.

Malaysian Exports

Shipments from Malaysia rose 1.2 percent to 396,684 tons in the first nine days of this month, compared with 392,185 tons in the first 10 days of August, cargo surveyor Intertek said Sept. 9. Sales fell 3 percent to 383,456 tons in the Sept. 1-10 period, Societe Generale de Surveillance said today.

The Malaysian Palm Oil Board will release the inventory and output data for August on Sept. 15.

December-delivery soybean oil rose as much as 0.5 percent to 41.95 cents a pound on the Chicago Board of Trade, erasing losses and narrowing the vegetable oil’s premium over palm oil to $60 a ton from $69.97 on Sept. 10, Bloomberg data show.

Soybeans for November delivery added as much as 0.7 percent to $10.38 a bushel on the Chicago Board of Trade, rebounding from declines of as much as 0.7 percent.

Production of the oilseed in the U.S., the world’s largest grower and exporter, will total 3.483 billion bushels, up 3.7 percent from a record 3.359 billion last year, the USDA said last week, raising its estimate from the previous month. The average forecast of 24 analysts was for 3.41 billion bushels.

On the Dalian Commodity Exchange, palm oil for delivery in May jumped 0.8 to 7,422 yuan ($1,098) a ton, while May-delivery soybean oil gained 0.3 percent to 8,172 yuan.

CME Group Inc.’s December-delivery palm oil contract, which is pegged to the Malaysian benchmark, climbed as much as 1.9 percent to $851.75 a ton.