Feb. 5 (Bloomberg) -- Palm oil gained on speculation that demand for the tropical oil used in food to fuels may improve as dry weather hurt soybean output prospects in South America.
The contract for April delivery climbed 0.6 percent to 2,544 ringgit ($768) a metric ton on the Bursa Malaysia Derivatives. Prices rose for the third time in four days.
Growing areas in Brazil, the world’s biggest soy exporter, will be warmer and drier than normal during the next 10 days, with temperatures this week topping 100 degrees Fahrenheit (38 degrees Celsius) in some regions, AccuWeather Inc. said yesterday. Soybeans can be crushed to yield an alternative to the tropical oil, grown mostly in Indonesia and Malaysia.
“The dryness in South America may see yields dropping below earlier estimates,” Sandeep Bajoria, chief executive officer of Sunvin Group, said by phone from Mumbai. “This is helping palm.”
In Brazil’s southern state of Parana, 88 percent of the soybean crop was in good condition as of Feb. 3 compared with 94 percent week ago, the Deral crop-research agency said on its website. The harvest is 9 percent complete, it said.
Soybeans rallied as much as 0.5 percent to $13.20 a bushel on the Chicago Board of Trade, the highest price since Jan. 16. The most-active contract gained for a fifth day in the longest winning run since the period to Jan. 15. Soybean oil climbed 0.6 percent to 37.93 cents a pound.
--Editor: Thomas Kutty Abraham