Palm Oil Climbs for First Time in Three Days, Tracking Soybeans

Nov. 12 (Bloomberg) -- Palm oil climbed for the first time in three days, tracking soybeans, which advanced on speculation dry weather in Argentina will shrink the crop in the biggest exporter of cooking oil and livestock feed made from the oilseed.

Dry weather was building across western areas of Argentina and began to spread into the northeast, MDA EarthSat Weather Services Inc. said in a report yesterday. Soybeans are sown in the country from September through January.

“Any disruption to soybean crops in Argentina or elsewhere is very positive for palm oil,” said Amol Tilak, analyst at Kotak Commodity Services Ltd. in Mumbai. “Palm oil is one of the cheapest edible oils available in the world today and will be in demand among major consumers.”

Futures for January delivery gained as much as 1.7 percent to 2,272 ringgit ($672) a metric ton on the Malaysia Derivatives Exchange, the biggest intraday advance in a week, and traded at 2,260 ringgit at 12:30 p.m. break. Prices have gained 33 percent this year.

Soybeans for January delivery rose 0.4 percent to $9.755 a bushel in after-hours on the Chicago Board of Trade at 12:37 p.m. Singapore time.

Soybean oil jumped 2.1 percent to the highest level in almost three months yesterday. January-delivery futures traded at 38.66 cents a pound at 12:38 p.m. in Kuala Lumpur, making it 27 percent more expensive than the tropical vegetable oil.

Palm oil may trade between 2,200 ringgit and 2,400 ringgit in the next two weeks and may climb further on increased demand from China and India, the biggest users, Tilak said.

“The stage is set for a short bullish phase in palm oil and we are waiting for a trigger,” he said.

Futures may reach 2,400 ringgit before the first quarter on speculation a strengthening El Nino may hurt output next year in Southeast Asia, Dorab Mistry, director of Godrej International Ltd., said Nov. 9. Prices may even surge to as high as 3,000 ringgit by the end of 2010 if oil reaches $100 a barrel, he said.

Crude oil traded unchanged at $79.28 a barrel after gaining 0.3 percent yesterday.