By Claire Leow July 8 (Bloomberg) -- Palm oil rebounded from the lowest level in almost eight months as a rally in crude and soybeans spurred demand for the commodity’s use in alternative fuels. Palm oil for September delivery rose as much as 1.8 percent to 2,310 ringgit ($721) a metric ton on the Malaysia Derivatives Exchange, lifting it from the lowest since Nov. 13 yesterday. It was at 2,300 ringgit at the 12:30 p.m. trading break. “Palm oil and crude oil are expected to rise in tandem,” said Nirgunan Tiruchelvam, an analyst at Royal Bank of Scotland Asia Securities (Singapore) Pte. “Biodiesel’s prospects are improving.” Edible oils, mostly used for food, can also be used as additives in biofuel. Crude oil gained 1.4 percent to $74.51 a barrel at 1:42 p.m. in Singapore. Crude prices rallied 2.9 percent yesterday after the International Council of Shopping Centers estimated U.S. retail sales expanded the most in four years. Soybeans in Chicago, crushed for a substitute oil, dropped 0.2 percent to $9.3025 a bushel at 2:04 p.m. Singapore time. It surged 3.6 percent yesterday to $9.325 a bushel on speculation that heavy rain will reduce yields in the U.S. The 2011 outlook for the demand and supply of vegetable oils provides support for palm oil, said a JPMorgan Securities (Malaysia) Sdn. report dated July 6. JPMorgan is “neutral-to- positive on the outlook for soybean oil which crude palm oil is more closely correlated to due to the strong supportive demand for the vegetable oil complex in general.” Support Level Prices will stay at about the 2,300 ringgit support level until clues can be discerned from the June data on Malaysian production, exports and stockpiles, said Arhnue Tan, a senior analyst at ECM Libra Capital Sdn. The Malaysian Palm Oil Board usually releases the data on the 10th of each month or the next working day. Malaysia is the second-largest palm oil producer and there’s concern stockpiles will rise as exports slow, Tan said. June palm oil exports from Malaysia climbed 1.5 percent to 1.35 million tons, cargo surveyor Intertek said on June 30. The gain was 1.2 percent to 1.34 million tons, according to rival Societe Generale de Surveillance. CME Group Inc.’s September-delivery palm oil contract, which is pegged to the Malaysian benchmark price, gained 0.4 percent to $715 a ton yesterday. On the Dalian Commodity Exchange, January-delivery palm oil climbed 1 percent to 6,284 yuan ($927) a ton in Shanghai at 2:04 p.m. Soybean oil gained 0.9 percent to 7,398 yuan. --Editors: Richard Dobson, Jake Lloyd-Smith. To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

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