Palm poised for second weekly advance

Palm oil, set for a second week of gains, climbed to the highest level in more than a year on speculation that production may drop in Indonesia and Malaysia, the world's biggest suppliers.

The contract for delivery in February gained as much as 1.5 per cent to RM2,692 a metric tonne on the Bursa Malaysia Derivatives, the highest level for most-active futures since September 24, 2012. Prices were at RM2,676 at the mid-day break, heading for a weekly advance of 2.4 per cent after climbing 4.2 per cent in the prior five-day period.

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. Shipments from Malaysia 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, data from surveyor Intertek show.

"We can expect declining production for at least the next two months because of the monsoon," said Isha Trivedi, an analyst at PhillipCapital India Pvt, from Mumbai. "Demand is expected to pick up from China as importers stock up for the New Year," she said, referring to the Lunar New Year in February.

Refined palm oil for May delivery gained as much as 1.9 per cent to 6,488 yuan (US$1,065) a tonne on the Dalian Commodity Exchange, the highest level for a most-active contract since March 13, before trading at 6,446 yuan. Soybean oil climbed 0.7 per cent to 7,326 yuan.

Soybeans for January delivery rose 0.2 per cent to US$12.945 a bushel on the Chicago Board of Trade. Soybean oil fell 0.2 per cent to 41.72 cents a pound.-