Palm Oil Heads for Weekly Gain as Soybeans Rally on Crop Concern

Palm oil advanced, poised for a weekly gain, on speculation that demand for the world’s most used cooking oil may increase after soybeans, crushed to make a competing product, rallied to a two-week high.

The contract for delivery in May advanced as much as 0.8 percent to 2,555 ringgit ($824) a metric ton on the Malaysia Derivatives Exchange, and ended the morning session at 2,551 ringgit. Futures are set to gain 2.7 percent this week.

Argentina’s 2012-2013 soybean crop output forecast will be trimmed to about 49 million tons, or 48 million, from a December forecast of 53 million by the Rosario Grains Exchange as this week’s rain didn’t offset damage from the previous month’s drought, according to a person with direct knowledge of the situation yesterday. Soybeans in Chicago today rallied for a fifth day to the highest level since Feb. 8.

“The market is focusing on Argentina although it is aware that it’s going to be a big crop.” said Gnanasekar Thiagarajan, a director at Mumbai-based Commtrendz Risk Management Services Pvt. “This will be a short-lived rally.”

Soybeans for May delivery climbed as much as 1.2 percent to $14.88 a bushel on the Chicago Board of Trade. Soybean oil for May delivery advanced 0.6 percent to 51.98 cents a pound. The cooking oil’s premium to palm oil was at $322.52 a ton today. The two are the most consumed edible oils in the world.

Refined palm oil for delivery in September rose 0.5 percent to 7,078 yuan ($1,134) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month increased 1.3percent to 8,738 yuan a ton.

To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at

To contact the editor responsible for this story: James Poole at

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.