Palm oil advanced to the highest level in more than a year on expectation that output may decline this month in Indonesia and Malaysia, the world's top suppliers.
The contract for delivery in February gained as much as 2.6 per cent to RM2,648 a metric tonne on the Bursa Malaysia Derivatives, the highest level for most-active futures since September 25, 2012, and was at RM2,629 at the mid-day break. Prices entered a bull market this month and rose 7.8 per cent this year, set for the first annual gain in three years.
Heavy rains may disrupt harvesting and reduce production in Indonesia and Malaysia in November, according to the Indonesian Palm Oil Association, which estimates yields in Indonesia to decrease by 15 per cent to 20 per cent this year.
"Supply is very tight," said Chandran Sinnasamy, head of trading at LT International Futures Sdn Bhd. A weaker Malaysian currency may further boost purchases from China and India, the top cooking oil consumers, he said.
The Malaysian ringgit fell by the most in almost two months today, making exports from the country cheaper in dollars. Palm oil shipments fell two per cent to 1 million tonnes in the first 20 days of November, less than a 13 per cent drop in the first 10 days of the month, data from surveyor Intertek show.
Soybeans for January delivery rose 0.3 per cent to US$12.7775 a bushel on the Chicago Board of Trade. Soybean oil gained 0.8 per cent to 40.89 cents a pound.
Refined palm oil for May delivery advanced 1.6 per cent to 6,368 yuan (US$1,045) a tonne on the Dalian Commodity Exchange and soybean oil climbed one per cent to 7,258 yuan
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