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Summary
Palm oil climbed to a 29-month high on concern that a drop in output and stockpiles in Malaysia, the second-biggest grower, will add to supply concerns. February-delivery futures advanced as much as 1.3 percent to 3,640 ringgit ($1,160) a metric ton, the highest price since July 4, 2008, on the Malaysia Derivatives Exchange. Malaysias palm-oil production may decline to 17.2 million tons this year, from 17.6 million tons in 2009, because of the dry weather earlier this year and the heavy rains caused by the current La Nina phenomenon, according to Dorab Mistry, director at Godrej International Ltd. The Malaysian Palm Oil Board will its report its monthly output, inventory and export data tomorrow. Most of the planters that Ive spoken to over the past couple of weeks have said that November production wasnt good, Arhnue Tan, senior investment analyst at ECM Libra Investment Bank, said by phone from Kuala Lumpur. The peak production didnt click in this year. Global palm oil demand is growing 7 percent to 11 percent a year, Bayu Krisnamurthi, deputy farm minister in Indonesia, the biggest producer, said on Dec. 2. World stockpiles of vegetable oils will equal 13.2 percent of demand in the 2010-2011 season, a critically low level, the Food and Agriculture Organization, or FAO, said in a report last month. Output in Malaysia dropped 1 percent to 14.3 million tons in the first 10 months of the year, according to data from the nations palm oil board. Production this year may total 17.6 million tons, Plantation Industries an Commodities Minister Bernard Dompok said Nov. 17. Global consumption of oilseed-products has increased too rapidly, paring stockpiles and pushing up prices of soybeans and rapeseed, Oil World said in a report on Dec. 7. Palm oil futures may advance to as much as 4,000 ringgit a metric ton by March, the highest level in almost three years, on increased imports by China and as dry weather hurts soybean planting in Argentina, according to Govindlal G. Patel, director of GGN International. China, the biggest buyer of soybeans is expected to import 57 million tons in the year from Oct. 1, up 13 percent from a year ago, the U.S. Department of Agriculture data show. Imports may exceed 14.2 million tons from October through December, up 4 million tons from a year earlier, Oil World said this week.
