Palm oil climbed to the highest level in more than a month on concern that rains in Indonesia and Malaysia, the biggest growers, will disrupt harvests and as dry weather threatened to trim soybean crops in South America.
The March-delivery contract advanced 0.8 percent to close at 3,185 ringgit ($1,006) per metric ton on the Malaysia Derivatives Exchange, the highest since Nov. 21. Futures have plunged 16 percent this year, heading for the first annual loss since 2008.
Intermittent to occasionally heavy rains may continue until tomorrow in the state of Sabah, which could cause floods in low-lying areas, the Malaysian Meteorological Department said on its website. Rain is also expected in Sarawak, Johor and Pahang, the forecaster said. The four states account for about 75 percent of total oil palm planted area in Malaysia, according to data from the nation’s palm oil board.
“A lot of the upward pressure on price has to do with the weather concerns and the upside pressure coming from soybean prices,” John Rachmat, an analyst with the Royal Bank of Scotland Plc., said by phone from Singapore today.
Soybeans jumped the most in 11 weeks yesterday on speculation that adverse weather may reduce output in South America, bolstering demand for U.S. supplies.
March-delivery soybeans climbed 3.2 percent to $12.095 a bushel yesterday on the Chicago Board of Trade, the biggest advance since Oct. 11. Futures traded 0.7 percent lower at $12.01 today.
About 50 percent of the soybean and corn crops in Argentina will be dry in the next 10 days after weekend rain stayed north of the main growing regions, Commodity Weather Group LLC said in a report yesterday. As much as a third of Brazil’s crops face a lack of rain, the forecaster said.
La Nina conditions and the resulting dry weather and higher temperatures intensified during the weekend and little rain is expected in the next two weeks, which may increase stress on corn and soybean development, Fred Gesser, senior agricultural meteorologist at Planalytics Inc. said yesterday.
Palm oil may average 3,000 ringgit a ton in 2012, more than the 2,700 ringgit estimated previously, Alvin Tai, an analyst at OSK Holdings Bhd., wrote in a report today.
Palm oil for delivery in May gained 1.3 percent to close at 7,986 yuan ($1,263) per ton on the Dalian Commodity Exchange and soybean oil for September delivery rose 1.2 percent to end at 8,978 yuan a ton.