Soybean plants grow in a growth chamber at the Monsanto
Chesterfield Village facility in Chesterfield, Missouri, US, on
April 15, 2010. A decline in US soybean production sent palm oil
prices skyrocketing Monday to 3,533 ringgit ($1,157) per ton on
the Malaysia Derivatives Exchange, the highest price in a year.
(Bloomberg Photo)

03/04/2012 (Jakarta Globe) - Palm oil rallied to the highest level in more than a year, snapping three days of losses, after a US government survey showed soybean acreage in the world’s largest exporter will decline, boosting oilseed prices.    

June-delivery palm oil surged 2.9 percent to close at 3,533 ringgit ($1,157) per ton on the Malaysia Derivatives Exchange, the highest price for a most-active contract since March 9, 2011. Futures climbed 8.1 percent in the quarter ended March 31.    

Farmers will sow 73.902 million acres with soybeans this year, down 1.4 percent from 2011 and the lowest in five years, the US Department of Agriculture said March 30. The forecast was about 1.5 million acres below the average estimate of analysts and almost 1.1 million less than a year earlier. Soybeans can be crushed to make soybean oil, which competes with palm oil for use in food and fuel.    

“US farmers plan to reduce soybean acreage in favor of corn,” Ivy Ng, an analyst at CIMB Group Holdings Bhd., wrote in a report.

“This, coupled with lower corn inventories, has pushed US grain prices higher and is positive” for crude palm oil prices, she said.

Corn inventories on March 1 fell more than analysts forecast to the lowest for this time of year since 2004, the USDA said.    

Soybeans for May delivery climbed 0.9 percent to $14.1575 a bushel on the Chicago Board of Trade today, extending the 3.5 percent gain on March 30. Futures surged 16 percent in the first quarter after dry weather reduced crops in South America.                         

Soybeans Gain    
Soybean oil for delivery in May advanced 0.7 percent to 55.48 cents per pound. The rally in palm oil today helped narrow its discount to soybean oil to $66.63 a ton from $93.39 on March 30, according to data compiled by Bloomberg.    

Palm oil exports from Malaysia, the second-largest producer, rose 4.8 percent to 1.23 million tons in March from the previous month, independent market surveyor Intertek said March 31.    

Palm oil’s rally in the first quarter “was a culmination of the South American drought,” Paramalingam Subramaniam, director of Kuala Lumpur-based brokerage Pelindung Bestari Sdn., said in an e-mail.    

Markets in China are closed for a holiday today.