Plummeting crude oil prices roiled global equity markets along with slumping tech stocks and worries over the corporate-bond market. Now it is palm oil growers’ turn to take a hit.

Gasoil, a motor and heating fuel made from crude, hasn’t been able to escape the plunge in petroleum, losing about 20 percent in the past seven weeks. That means palm oil is now much less appealing as an ingredient in biofuel at a time when growers are banking on that demand to lift prices from three-year lows.

Palm oil’s discount to gasoil, another name for diesel, narrowed to less than...