PalmoilHQ Crude Palm Oil Futures Track Soybean Oil Gain on South American Crop Damage

February 10, 2009 11:55 GMT+8
Crude palm oil futures gained after rival soybean oil increased as drought damaged crops in South America, the biggest shipper of vegetable oil and animal feed made from the oilseed.

Futures climbed as much as 3.6 percent on speculation the U.S. government will lower its estimates for world output in a report later today as dry weather hurts crops in Argentina and Brazil. Soybeans are crushed to produce soybean oil, which is used in food and alternative fuels.

“The grains and oilseeds markets are currently being driven by South American weather that is currently threatening crop potential,” Rabobank Group analysts including Luke Chandler said in a report today.

Palm oil for April delivery advanced 2.6 percent to 1,928 ringgit ($537) a metric ton on the Malaysia Derivatives Exchange at 11:53 a.m. Singapore time.

Soybean oil for March delivery rose for a fifth day, rising 0.9 percent to 34.54 cents a pound at 11:15 a.m. Singapore time in after-hours trading on the Chicago Board of Trade. The futures rose 2.5 percent yesterday when the Malaysian market was closed for a holiday.

The U.S. Department of Agriculture will today forecast Brazil’s soybean crop at 57.4 million tons, down 2.7 percent from a January forecast, according to the average estimate of 13 analysts in a Bloomberg News survey last week.

Argentina’s estimated harvest will be cut 7.7 percent to 45.7 million tons, the analysts said.