Palm oil climbed for a sixth day on supply concerns as bad weather curbs harvests of oilseeds and on expectation that food demand will expand in Asia next year. The March-delivery contract on the Malaysia Derivatives Exchange gained as much as 1.6 percent to 3,725 ringgit ($1,204) a metric ton in Kuala Lumpur before ending the morning session at 3,723 ringgit. The La Nina weather event has lowered oil-palm yields and disrupted harvesting in Indonesia and Malaysia, the two largest producers, while drought in South America has affected soybean crops. Increased demand for food in Asia will help boost prices next year, fueling faster inflation, Yougesh Khatri, a senior economist at Nomura Holdings Inc., said on Dec. 24. “The heavy rains in the palm oil-producing countries and also the dry spell in soy-exporting countries have boosted the vegetable oil market,” Ker Chung Yang, an analyst with Phillip Futures Pte, said from Singapore today. The soybean harvest in Argentina may shrink 21 percent next year as dry weather delays planting and worsens growing conditions, Oil World said on Dec. 21. Output in five South American growing nations may drop by 8 million to 10 million tons, the researcher said. Brazil and Argentina, the world’s second-and third-largest producers, harvest the crop around March. Palm oil has risen 39 percent this year, heading 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. China Imports Prices could rise further as “China builds up their importing activities preparing for the Lunar New Year holidays,” Ker said. Cooking oils demand typically rises in the weeks before the Chinese Lunar New Year, which falls in early February next year. China’s December soybean imports may be 5.3 million tons, Grain.gov.cn said in e-mailed report on Dec. 23. 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. Farm-commodity prices including corn will extend rallies next year, driven by increased demand from emerging markets including China, the world’s most-populous nation, and higher energy costs, Rabobank Groep NV said in a report on Dec. 22. March-delivery soybean oil in Chicago dropped 0.3 percent to 57.08 cents a pound. Prices have surged 40 percent this year. Palm oil for September on the Dalian Commodity Exchange gained 0.6 percent to 9,716 yuan ($1,466) a ton at the 11:30 a.m. trading break. Dalian soybean oil rose 0.5 percent to 10,470 yuan a ton. CME Group Inc.’s March palm-oil contract gained 1.3 percent to $1,188.50 a ton on Dec. 23 and hasn’t traded today. 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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