Palm oil headed for a seventh week of gains, the longest rally since May 8, 2009, as a weaker dollar spurred investors to buy commodities as alternative assets. December-delivery futures advanced as much as 1.1 percent to 2,948 ringgit ($955) a metric ton on the Malaysia Derivatives Exchange, the highest since Aug. 1, 2008. The contract traded at 2,940 ringgit at the 12:30 p.m. trading break, gaining 6.5 percent this week. The dollar traded at $1.4042 per euro as of 12:58 p.m. in Singapore from $1.4084 in New York yesterday, when it reached $1.4122, the lowest level since Jan. 26. “A weaker dollar makes U.S. commodities cheaper for buyers using other currencies,” supporting soybean prices near $12 a bushel and giving palm oil a “a bullish bias,” said Ker Chung Yang, investment analyst at Phillip Futures Pte. in Singapore. Prices have held at a 26-month high since the U.S. Department of Agriculture said on Oct. 8 that the country’s soybean output will be 3.408 billion bushels (93 million tons), less than the 3.483 billion projected in September. Palm and soybean oils are direct substitutes for use in food and fuels. Soybeans in Chicago traded above $12 a bushel this week for the first time since June 5, 2009, gaining about 7 percent for the week. Soybean oil climbed about 3.5 percent this week. A widening palm oil discount to soybean oil supports exports and prices of the tropical oil, analyst Alvin Tai of OSK Investment Bank Sdn. said. Futures could test 3,000 ringgit soon, Ker and ECM Libra Capital Sdn. analyst Arhnue Tan said. Palm oil hasn’t traded at more than 3,000 ringgit since July 31, 2008. Malaysia Exports Exports from Malaysia surged 21 percent in September to 1.47 million tons, helped by orders from China and Pakistan, according to the country’s palm oil board. “There could be a flight to safety by speculators into commodities with the weak U.S. dollar,” ECM’s Tan said. Prices surged this week after palm oil traded $141 cheaper a ton compared with soybean oil on Oct. 8, the widest discount this year, according to Bloomberg data. The discount, which widened after soybeans surged on the USDA report, has averaged $101 a ton this week, from $97 a ton last week, and $89 so far this year, according to Bloomberg data. The USDA’s downgrade of its soybean crop forecast, coupled with possible supply disruptions caused by La Nina rains, prompted CIMB Investment Bank Bhd. analyst Ivy Ng to raise on Oct. 11 her palm oil forecast for this year by 9 percent to an average 2,630 ringgit. Futures have averaged 2,547 ringgit this year, according to Bloomberg calculations. DBS Vickers Securities (Singapore) Pte. plantation analyst Ben Santoso said he will also be revising his forecasts. CME Group Inc.’s December palm oil contract, which is pegged to the Malaysian benchmark price, dropped 0.2 percent to $944.50 at 10:51 a.m. after yesterday reaching the highest since the contract began trading in May. Palm oil on the Dalian Commodity Exchange for May delivery gained 0.3 percent to 8,330 yuan ($1,253) a ton at the 11:30 a.m. trading break, climbing 7.5 percent for the week. To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net

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