16/03/2010 (Bloomberg) - Rains and thunderstorms were forecast in Malaysia’s biggest palm oil producing states, easing concerns El Nino may curb output in the world’s second-largest producer of the tropical oil. Prices fell.

Isolated showers and thunderstorms were predicted starting today through March 22 in seven of 13 growing states including Johor, Pahang and Perak, according to the seven-day forecast of the Malaysian Meteorological Department.

Johor, Pahang and Perak accounted for 40 percent of the nation’s output in the first two months of the year, according to the Malaysian Palm Oil Board’s Web site.

Rains may increase soil moisture, reduce tree stress and improve oil palm yields, likely curbing gains in prices of the tropical commodity. Palm oil advanced 57 percent last year as smaller soybean output in South America tightened edible oils supplies and on concern El Nino may parch crops in Asia.

“Concerns about the dry weather were hitting palm oil pretty hard, but rain has come early,” Carey Wong, an analyst at OCBC Investment Research Pte. said by telephone today from Singapore. Some planters “are not really seeing very adverse weather impact” on palm oil production yet, he said.

El Nino, which reduces rain in Asia, may drive prices to as high as 3,300 ringgit ($993) a ton in the first half, Anne Frick, vice president for research at Prudential Bache Commodities LLC said in a March 8 interview. The price may reach 3,200 ringgit in the second half, Godrej International director Dorab Mistry told a conference in Kuala Lumpur the next day.