07/07/2011 (Bloomberg) - Palm oil, little changed, may advance after a recent slump in prices widened the discount to soybean oil making it a cheaper option and as yesterday’s jump in crude oil lifted the appeal of vegetable oils as biofuel feedstock.

The September-delivery contract climbed as much as 0.4 percent to 3,051 ringgit ($1,015) per metric ton on the Malaysia Derivatives Exchange and traded at 3,043 ringgit at 4:21 p.m. Futures earlier today touched the lowest level in more than eight months and have declined 20 percent this year.

“Oil moving up may be making it more attractive from the biofuel side of things,” Ivy Ng, an analyst at CIMB Investment Bank Bhd., said today.

Crude for August delivery lost 0.4 percent after gaining as much as 0.9 percent. The contract jumped 2 percent yesterday.

Soybean oil imports by India, the world’s second-largest cooking oil user, may decline 40 percent to 1 million tons this year as buyers turn to cheaper palm oil, Sandeep Bajoria, chief executive officer of Sunvin Group, said yesterday. Palm oil imports may increase 3.4 percent to 6.6 million tons in the year ending Oct. 31, he told Bloomberg in an interview.

“That is underlying support and demand now, from the India side, because they are quite price sensitive,” Ng said. “So as the discount widens, there will be incentive to switch out of soy oil to palm, although their preferred choice is still soy but if it’s cheaper they might consider switching.”

Soybean oil’s premium over palm oil widened to $230.78 a ton, from $225.16 on July 4, according to Bloomberg data.

November-delivery soybeans dropped 0.3 percent to $13.14 a bushel on the Chicago Board of Trade, while soybean oil for delivery in December climbed as much as 0.5 percent to 56.49 cents a pound.

January-delivery palm oil on the Dalian Commodity Exchange dropped 0.2 percent to close at 8,828 yuan ($1,365) a ton. Soybean oil for delivery in the same month closed little changed at 10,038 yuan a ton.