Palm oil advanced for a fourth day on speculation that China, the top cooking oils user, and other emerging markets will fuel demand for farm commodities in 2011. The March-delivery contract on the Malaysia Derivatives Exchange gained as much as 1.2 percent to 3,663 ringgit ($1,174) a metric ton and ended the morning session at 3,657 ringgit. The price reached 3,766 ringgit on Dec. 14, a 33-month high. Farm-commodity prices will extend rallies next year, driven by increased demand from emerging markets and higher oil costs, Rabobank Groep NV said in a note on Dec. 21. Palm oil has risen 37 percent this year, set for a second annual gain, on concern that rising demand from China and India, the biggest users, may strain global cooking oil supplies curbed by rain and drought. Palm-oil prices will “remain high” in 2011 on increasing Chinese demand for oilseeds and higher biofuels output, Rabobank said. Surging energy costs, low global food stocks and a weak dollar may also bolster prices of agricultural commodities, the report said. Palm and soybean oils are direct substitutes. China’s December soybean imports may be 5.3 million tons, Grain.gov.cn said in e-mailed daily report today. Shipments for January and February are forecast at 5 million tons and 3.5 million tons, respectively, it said. Grain.gov.cn is a unit of the China National Grain & Oils Information Center. “China accounts for 60 percent of global soybean imports, in addition to approximately 20 percent of world-traded soybean oil,” Rabobank said. “Such tremendous growth is likely to be replicated in other commodities as China’s shifting consumption patterns increase demand.” Soybean Plantings Soybeans have surged 40 percent this year on concern that Argentina’s crop may shrink 21 percent next year as dry weather delays planting and hurts growing conditions, researcher Oil World said Dec. 21. Production in five South American growers may drop by 8 million to 10 million tons, according to Oil World. Palm oil may climb to 4,000 ringgit in the first quarter as traders in China rebuild inventories before the Lunar New Year, when demand for food soars, said Arhnue Tan, a senior analyst at ECM Libra Capital Sdn. The celebration falls in early February. March-delivery soybean oil on the Chicago Board of Trade gained as much as 0.7 percent to 56.96 cents a pound. Palm oil for September on the Dalian Commodity Exchange climbed as much as 2 percent to 9,630 yuan ($1,449) a ton and traded at 9,616 yuan at 11:30 a.m. Soybean oil rose as much as 2.7 percent to 10,440 yuan a ton and was at 10,422 yuan at 11:30 a.m. CME Group Inc.’s March palm-oil contract fell 0.2 percent to $1,171.25 a ton at 11:28 a.m. in Singapore. To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net To contact the editor responsible for this story: Richard Dobson at Rdobson4@bloomberg.net

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