05/04/2011 (Bloomberg) - Palm oil increased to the highest in two weeks, paced by gains in corn and soyabeans after a U.S. government report showed inventories fell from last year and soybean plantings will drop.

The June-delivery contract climbed 1.3 percent to 3,382 ringgit ($1,121) a metric ton, the highest close since March 21 on the Malaysia Derivatives Exchange. Futures gained 2.4 percent in the week ending April 1.

Corn stockpiles on March 1 declined 15 percent from a year earlier to a four-year low, as demand for animal feed, fuel and food climbed, the U.S. Department of Agriculture said on March 31. Soyabeans, used to make a substitute cooking-oil, rose as U.S. farmers intend to cut the area planted by 1 percent to 76.609 million (31 million hectares), a three-year low, close to analysts’ expectations.

“The USDA data showed farmers will cut plantings for soybeans and that’s not surprising; what’s surprising is the corn stocks,” Ker Chung Yang, an analyst at Phillip Futures Pte, said by phone from Singapore. “This will have some spillover effect on crude palm oil as well.”

Corn advanced for a third day to the highest price since 2008 on concern that a planned increase in planting in the U.S., the world’s largest grower, will not be enough to rebuild stockpiles. In the U.S., the grain is the primary ingredient in ethanol, an alternative fuel. Palm and soyabean oils are substitutes in food and fuel uses and prices can be influenced by shifts in energy costs.

Oil climbed for a third day in New York, trading at a 30- month high, as signs of economic recovery in the U.S. boosted speculation fuel demand will rise in the world’s largest crude user. Futures advanced as much as 0.8 percent to $108.78 a barrel in electronic trading on the New York Mercantile Exchange, the highest level since September 2008.

“It’s likely to be a boost factor for CPO also, because of the biofuel uses,” Ker said. “The fight between food and fuel is likely to get more intensive.

Soyabean futures for May delivery increased as much as 0.7 percent to $14.0275 a bushel and traded at $13.98 at 8:13 p.m. Singapore time. Soybean oil for the same month climbed as much as 0.7 percent to 59.07 cents per pound and traded at 58.95 cents.

CME Group Inc.’s most-active June palm-oil contract, pegged to the Malaysian benchmark, advanced 0.9 percent to $1,118.25 a ton.