09/04/2012 (Bloomberg) - Palm oil, used in food and fuel, climbed to the highest in more than a year in Malaysia as South American soybean supplies declined. In China, palm and soybean oil rose to the costliest in more than six months.

The June-delivery contract advanced 1.3 percent to end at 3,604 ringgit ($1,176) a metric ton on the Malaysia Derivatives Exchange, the most expensive close for a most-active contract since March 7, 2011. Futures advanced 5 percent this week, the fifth straight gain and the longest run in more than 16 months. Speculation stockpiles in Malaysia may drop also spurred buying.

A worker holds up a handful of loose oil palm fruit, which will be processed into palm oil, at IOI Corp.'s Pamol Kluang Palm Oil
Mill, in Johore, Malaysia. Photographer: Munshi Ahmed/Bloomberg

Palm oil is “rising mainly on anticipation of bullish stock data and also on the back of the increase of soybean prices,” Ivy Ng, an analyst with CIMB Group Holdings Bhd., said by phone from Kuala Lumpur today. With Malaysian inventory data on April 10, “people will buy in anticipation of that news as well as the lower soybean crop.”

Stockpiles (PASTTOTL) in Malaysia fell 2.4 percent to 2.01 million tons in March, from 2.06 million tons in February, according the median of estimates in a Bloomberg survey of four analysts and two plantation companies. The Malaysian Palm Oil Board will release data for inventories, output and exports.

Argentina, Brazil
Soybean production in Argentina and Brazil will probably be smaller than the U.S. government said last month after hot, dry weather reduced yields, based on a survey of as many as 20 analysts by Bloomberg News yesterday. Soybean oil, produced from the oilseed, and palm oil can replace each other.

Argentina’s crop will be 45.12 million tons and the Brazilian harvest 66.77 million tons, according to the survey, which compares with U.S. Department of Agriculture estimates of 46.5 million tons and 68.5 million tons. The USDA is set to release new estimates on April 10 at 8:30 a.m. in Washington.

Soybeans for May delivery rose 1 percent to $14.34 a bushel on the Chicago Board of Trade yesterday, the highest close for a most-active contract since Sept. 2. Soybean oil for May gained 1.1 percent to 56.64 cents per pound yesterday. U.S. exchanges are closed for a public holiday today.

Palm oil for delivery in September climbed 1 percent to end at 8,968 yuan ($1,422) a ton, the highest close for the most- active contract since Sept. 9. Soybean oil for delivery in the same month increased 1.2 percent to close at 9,996 yuan a ton, the highest since Sept. 21.