16/06/2011 (Bloomberg) - Palm oil advanced after a recent slump in prices widened the discount to soybean oil to the highest in almost three years, increasing the appeal of the tropical oil for food uses.

The August-delivery contract gained as much as 0.4 percent to 3,267 ringgit ($1,078) a metric ton on the Malaysia Derivatives Exchange and was at 3,258 ringgit at 11:52 a.m. in Kuala Lumpur. The contract closed at 3,239 ringgit on June 10, the lowest level since May 12.

Soybean oil’s premium over palm oil widened to $214.03 a ton on June 10, the most since August 2008, and stood at $210.16 today. This compares with a 12-month average of $100.50 a ton, according to Bloomberg data.

“As a result of the recent fall in crude palm oil prices caused largely by the negative production data for May, the discount between palm oil and soybean oil has widened,” Hoe Lee Leng, an analyst with RHB Research Institute Sdn, said in a report today. “We believe these large discounts would potentially result in price-sensitive countries shifting away from soyoil and rapeseed oil and back to palm oil.”

Palm oil’s discount to rapeseed oil also widened to $333 a ton from $282 a ton last month and above historical averages of $200 a ton, she said.

Malaysia’s palm oil exports rose 25.9 percent to 671,314 tons in the first 15 days of June from the same period in May, surveyor Intertek said today. Output expanded 13.7 percent to 1.74 million tons in May from April, the highest level in 19 months, the Malaysian Palm Oil Board said on June 10.

November-delivery soybeans rose as much as 0.4 percent to $13.6875 per bushel in Chicago, while soybean oil for December delivery gained as much as 0.3 percent to 58.35 cents a pound.

January-delivery palm oil on the Dalian Commodity Exchange climbed as much as 0.3 percent to 9,226 yuan ($1,424) a ton, before trading at 9,218 yuan. Soybean oil for delivery in the same month dropped as much as 0.4 percent to 10,272 yuan a ton.