Palm oil futures hit record $901 per ton as oil price hikes have ripple effect

Palm oil futures rose to a record $901 per ton yesterday on the Malaysian Derivatives Exchange. This translates to a producer cost of $3.15 per gallon, or about 40 cents higher than the current US cost of biodiesel, for which palm oil is a feedstock.

Palm oil had hit $876 per ton on November 1st. The Malaysian Palm Oil Board (MPOB) has announced at the end of the summer that it expected prices would remain in the $710-$810 range in 2008.

The head of the Indonesian Palm Oil Association said that prices should be expected to climb to more than $1000 per ton in 2008. LMC’s managing director said that palm futures could rise to $1020 per ton by spring 2008 if crude oil reaches $100 per barrel. India has increased its palm oil imports by 32 percent this year to 2.62 million tons as global vegetable oils inventories continue to drop. China imported 3.9 million tons of palm oil through September.

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