Palm Oil Gains to More Than 3,000 Ringgit a Ton for First Time Since 2008.

Palm oil gained to more than 3,000 ringgit ($963) a metric ton for the first time since July 31, 2008, on speculation that supplies may lag behind surging demand from China and India.

The January-delivery contract rose as much as 1.2 percent to 3,021 ringgit on the Malaysia Derivatives Exchange and was at 2,999 ringgit at the 12:30 p.m. break in Kuala Lumpur.

The world’s most-consumed edible oil has rallied 32 percent from this year’s low in July, on a combination of weather- related production concerns and substitution demand because of a lower-than-forecast global soybean crop.

“Demand for agri-commodities is likely to outstrip supply in the wake of strong emerging-market demand,” Tanuj Shori, an analyst at Nomura Singapore Ltd., said today.

Nomura yesterday raised its average palm oil forecast for 2011 by 20 percent to 3,000 ringgit, and its forecast for this year by 5 percent to 2,650 ringgit. Palm oil has averaged 2,555 ringgit in 2010.

“A tighter global vegetable oils outlook, a stronger crude oil price and a weaker U.S. dollar point to higher crude palm oil prices for next year,” the report said.

China’s economy grew 9.6 percent in the third quarter, beating forecasts, as inflation accelerated in September to a 23-month high, the statistics bureau said today. China raised key interest rates two days ago for the first time since 2007.

India, the top buyer of vegetable oils after China, may import a record quantity of soybean and palm oils for a fourth year as a growing population and rising incomes spur demand for processed foods, Ashok Sethia, president of the Solvent Extractors’ Association of India, said on Sept. 21.

Curbing Demand

Purchases may climb to 9.5 million tons in the year starting Nov. 1, compared with 9 million tons this season, the processors’ group said.

Palm oil needs to trade above 3,000 ringgit to discourage Indian and Chinese imports, Dorab Mistry, a director at Godrej International Ltd., said on Aug. 26.

An oils trader for almost three decades, Mistry correctly forecast in March that prices would rise to more than 3,000 ringgit after June. He said it may rise as high as 3,200 ringgit on global oilseed supply concerns.

Palm oil is used in cooking and fuel applications, and is sensitive to crude oil price movements, James Fry, managing director of LMC International, said yesterday in a speech at a conference in Kuala Lumpur.

Crude oil surged 2.9 percent yesterday to $81.77 a barrel, lifting commodities on concern that a weakening dollar would fan inflation. It last traded 0.2 percent higher at $81.92.

Soyoil Climbs

Soybean oil in Chicago rose as much as 1 percent to 48.95 cents a pound, extending yesterday’s 2.9 percent jump to the highest since September 2008, and last traded at 48.52 cents.

The gain widened the discount palm oil trades to soybean oil to as much as $112.34 a ton, from an average of $100.48 a ton last week and $83 last month, according to Bloomberg data.

When soybean oil widens its premium over palm oil, price- sensitive markets such as China and India react quickly to the changes, Fry said yesterday.

CME Group Inc.’s January palm oil contract, pegged to the Malaysian benchmark price, gained as much as 1.3 percent to $967.25 a ton, the highest since the contract started trading in May.

Palm oil on the Dalian Commodity Exchange for May delivery soared as much as 3.7 percent to 8,428 yuan ($1,268) a ton, pausing at 8,344 yuan at the 11:30 a.m. trading break.

Source : bloomberg.com