Feb. 7 (Bloomberg) -- Palm oil advanced to the highest level in two weeks on speculation that dry weather in Brazil may reduce soybean output in the world’s biggest exporter, trimming global vegetable oil supplies.
Palm oil for April delivery rose 0.4 percent to 2,577 ringgit ($774) a metric ton on the Bursa Malaysia Derivatives, the highest level at close for a most-active contract since Jan. 24. Futures climbed 0.7 percent this week.
An unusually strong hot, dry weather pattern during the next week will increase stress on maturing soybeans in Brazil, while above-normal rain in Argentina may cause flooding, T-Storm Weather said yesterday. Soybeans are crushed to yield an alternative to palm oil, produced mostly in Indonesia and Malaysia.
“Soybeans are moving purely on basis of the climate in Brazil, and that is something which is pulling up the markets,” Prathamesh Mallya, an analyst at AnandRathi Commodities Ltd., said by phone from Mumbai. “Production constraints in palm oil and inventories below 2-million tons are positive for the market as well.”
Reserves in Malaysia, the biggest producer after Indonesia, probably totaled 1.98 million tons in January, compared with 1.99 million tons a month earlier and 2.56 million tons a year ago, according to a Bloomberg survey. The Malaysian Palm Oil Board will publish the data on Feb. 10.
Soybeans were little changed at $13.275 a bushel on the Chicago Board of Trade, after rising for the past six sessions. Soybean oil was little changed at 38.63 cents a pound, after advancing to a one-month high yesterday.
Refined palm oil for May delivery jumped 2.3 percent to close at 5,804 yuan ($957) a ton on the Dalian Commodity Exchange. Soybean oil rose 3.5 percent to end at 6,614 yuan. Chinese markets re-opened today after a week-long holiday for the Lunar New Year.
--With assistance from Pratik Parija in New Delhi. Editor: Thomas Kutty Abraham