30/09/2010 (Bloomberg) - Palm oil, poised to post its first quarterly gain in three, climbed ahead of a report on U.S. inventories of soybeans, used to make a rival oil.

December-delivery palm oil gained as much as 1.5 percent to 2,738 ringgit ($887) a metric ton on the Malaysia Derivatives Exchange and was at 2,735 ringgit at 4:07 p.m. Prices dropped 1.4 percent yesterday, the biggest fall since Aug. 24. Soybean oil and palm oil can be used as substitutes in food and fuel.

“For this week, the strong correlation between crude palm oil and Chicago soybeans is likely to remain,” said Ker Chung Yang, an investment analyst at Philip Futures Pte.

Soybeans in Chicago advanced for the first time in three days, gaining as much as 0.9 percent to $11.09 a bushel ahead of a U.S. Department of Agriculture inventory report today for soybeans, corn and wheat. Soybeans traded at $11.0625 a bushel.

“Should Chicago soybeans re-ignite another rally after the release of USDA quarterly stocks report, we expect crude palm oil to break above 2,750 ringgit levels,” Ker said.

Reserves of U.S. soybeans are forecast to reach 151 million bushels as of Sept. 1, from 138 million a year earlier, according to a survey of 19 analysts by Bloomberg News.

Palm oil climbed 15 percent this quarter, the most since the fourth quarter of 2009, as demand increased before festivals and excess rain hurt harvests, causing stockpiles to drop in the seven months through July.

Malaysia’s palm oil exports rose 30 percent in September from a month earlier to 1.5 million tons, estimated Societe Generale de Surveillance, an independent cargo surveyor today.

Festival Demand
Exports to China, the biggest consumer of edible oils, surged to 268,770 tons from 153,350 tons, while exports to Pakistan jumped to 203,040 tons from 111,670 tons in August, the data showed. China marks National Day with a week’s holiday starting tomorrow. Pakistan’s orders were spurred by the Muslim Eid holidays early in September.

Heavy rain in Malaysia and Indonesia, the largest palm oil growers, have been “curbing crude palm oil producers’ harvesting ability and leading to significant logistic challenges,” causing supply concerns that supported prices, Credit Suisse analyst Teddy Oetomo said today.

Still, Malaysian palm oil reserves climbed in August, jumping 23 percent to 1.72 million tons from July, as output rose a fourth month, the country’s palm oil board said Sept. 15.

India’s monsoon, the main source of irrigation for 235 million farmers, may be the best in three years after La Nina increased precipitation in August and September, according to the state-run forecaster. Showers in the central states, the biggest producers of soybeans, were 4 percent above normal.

CME Group Inc.’s December palm oil contract, pegged to the Malaysian benchmark price, climbed 1.4 percent to $881.50 a ton. On the Dalian Commodity Exchange, May-delivery palm oil rose 0.8 percent to 7,746 yuan ($1,158) a ton for a 21 percent surge for the quarter.