Palm oil advanced for a fourth day at the highest price in more than two years

Palm oil advanced for a fourth day at the highest price in more than two years on speculation that global demand for vegetable oils exceed demand.

The February contract on delivery rose as much as 1.6 percent to 3,540 ringgit (1,123 dollars) a tonne before closing at 3,500 ringgit on the Malaysia Derivatives Exchange, the highest since July 15, 2008. Prices, up 31.4 percent this year, down to an annual gain of a second.

Global demand for palm oil is growing 7 percent to 11 percent a year, Bayu Krisnamurthi, Deputy Minister of Agriculture in Indonesia, the largest producer, said today. World stocks of vegetable oils will equal 13.2 percent of demand in the 2010-2011 season, a dangerously low level, "said the Organization for Food and Agriculture, FAO, in a report last month .

"Exports from the point to the strong Malaysian palm oil demand from major importers such as China, the European Union and India," said Krishna Reddy, an analyst at Way2Wealth Commodities Ltd. in Mumbai. "The biggest demand is coming at a time when supply concerns are increasing."

Malaysia exports 19.2 percent to 1.56 million tonnes in November from the previous month, independent surveyor Societe Generale de Surveillance, said this week. Shipments to China and India, the largest users of cooking oil, jumped 66.3 percent and 72.8 percent respectively, data showed on SMS.

World production of vegetable oils such as palm oil, soybean oil, rapeseed oil and sunflower oil will increase by 1.5 percent to 174.6 million tonnes, the FAO's forecast. Even so, demand will be estimated by the agency of the United Nations at 178 million tonnes, draining inventories.

Decreased production

the production of palm oil in Indonesia may be 21.8 million tons this year, down from 22.5 million tonnes previously forecast, the decline in yields, the China National Grain and Oils Information Center, said on 29 November, citing OilWorld, an industry publication.

Production in Malaysia, the second largest producer, fell 1 percent to 14.3 million tonnes in the first 10 months of the year, according to the National Council of palm oil. Production this year may add 17.6 million tons, Plantation Industries and Commodities, Mr Bernard Dompok said Nov. 17.

"As concerns about soy supplies provided, however, palm oil will continue its rally," said Ramos. Palm oil may rise to 3,800 ringgit in the next month, he said.

oil for January delivery soybeans lost up to 0.7 per cent to 52.27 cents per pound in electronic trading on the Chicago Board of Trade. Prices rose 3.2 percent yesterday, more than two weeks. Soybeans for January delivery shed 0.7 percent to $ 12.7375 a bushel after advancing 3.2 percent yesterday, the most since Nov. 9.

National Development and Reform Commission asked a number of producers and COFCO Ltd., Yihai Investment Co. Kerry and 93 of the group not to raise cooking oil prices over the next four months, the China Business News, citing a person unidentified attended a conference of economic planning.

September oil palm delivery bag Dalian rose 0.9 percent to 9066 yuan ($ 1,361) per tonne, the highest closing price since Nov. 12, and soybean oil for delivery in month advanced 0.9 percent to 9,718 yuan per ton, two-week high.

CME Group Inc. 's March palm oil contract fell as much 1.6 percent to $ 1096.25 per ton.