Palm oil gained to the highest level in 35 months on concern that a La Nina weather event that caused flooding in Asia and drought in South America may persist for a further four months. April-delivery futures in Kuala Lumpur rose 2.3 percent to end at 3,895 ringgit ($1,280) a metric ton. Earlier, the price climbed as much as 2.7 percent to 3,910 ringgit, the highest level since March 2008. Malaysia’s markets are opened for half a day today and will close for a two-day Lunar New Year holiday from tomorrow. La Nina, which started in June and usually lasts for nine months or more, has led to above average rainfall in most parts of Southeast Asia, hindering harvests in Indonesia and Malaysia, the top palm-oil producers. The weather event’s strength may decrease during the next four months, the Malaysian Meteorological Department said in response to questions, supporting forecasts by the World Meteorological Organization. “The La Nina is still on going and although it’s probably passed its peak, it’s still quite strong,” said Ben Santoso, an analyst at DBS Vickers Securities (Singapore) Pte. “Rains are not over yet.” Climate indicators continue to indicate a strong, mature La Nina, although there are clear signs the event has passed its peak, the Australian Bureau of Meteorology said today. Flooding in the southern Malaysian state of Johor, a major palm oil-producing state, caused prices to surge to the most in more than two months on Jan. 31. Still, the Malaysian weather office yesterday downgraded its heavy rainfall warning for the state, according to its website. ‘Back to Normal’ Excessive rain “may only have a short-term impact, as we note that the floods have already been cleared since then and harvesting activities should therefore be back to normal,” RHB Research Institute Sdn. said in a report today. La Nina caused droughts in Argentina, affecting soybean crops in the world’s third-largest producer. March-delivery soybeans gained as much as 0.5 percent to $14.4575 a bushel and were at $14.4225 at 1:31 p.m. Soybean oil for delivery in the same month climbed as much as 0.5 percent to 59.01 cents a pound. September-delivery palm oil on the Dalian Commodity Exchange rose 0.5 percent to 9,908 yuan ($1,505) a ton in Shanghai yesterday. Soybean oil for delivery in the same month rose 0.3 percent to 10,628 yuan at the close yesterday. China’s markets are closed from Feb. 2-8 for Lunar New year holidays. CME Group Inc.’s April palm-oil contract, pegged to the Malaysian benchmark price, rose 1.9 percent to $1,279.75 a ton at 1 p.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: Matthew Oakley in Singapore

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