Palm oil reaches 33-month high

Palm oil rose to the highest level in more than 33 months on concern that global supplies of cooking oils will shrink after rains disrupted harvests in Indonesia and Malaysia, the biggest producers of the tropical commodity. March-delivery futures advanced as much as 1.6 per cent to 3,850 ringgit ($1,256) a tonne on the Malaysia Derivatives Exchange, the highest level since March 2008, and closed the morning session at 3,839 ringgit. Prices surged 42 per cent in 2010, a second straight year of gains. “The palm oil industry in Malaysia is no doubt facing a shortage in supply,” Bernard Ching, an analyst at ECM Libra Capital Sdn, said in a report on Monday. “Prices will cross the 4,000 ringgit barrier in the first quarter of 2011.” Palm oil futures have advanced 68 per cent in the past six months amid concern that the supply of cooking oils may tighten as dry weather in Argentina hurt the crop in the top soybean-oil producer and rains affected oil-palm harvests in Indonesia and Malaysia. Vegetable oil reserves are forecast to touch a seven- year low at the end of this season, according to the Economic Research Service of the US Department of Agriculture.