KUALA LUMPUR, Oct 29 — Palm oil fluctuated as investors weighed speculation that wet weather will disrupt harvests in Malaysia against the impact of weakening petroleum prices which may reduce demand for the tropical oil in biofuels.

The contract for delivery in January advanced and declined at least 0.4 per cent before trading at RM2,458 (US$782) a metric tonne by the midday break on the Bursa Malaysia Derivatives. Palm for physical delivery in November was at RM2,475, data compiled by Bloomberg show.

West Texas Intermediate crude oil fell from the highest level in a week before US government data forecast to show inventories climbed to the most in four months. Isolated showers and thunderstorms are predicted over Sabah, Sarawak and Johor, the biggest palm oil producers, according to a seven-day outlook on the Malaysian Meteorological Department’s website. While palm oil is produced year-round, output peaks from July to October. The monsoon in Malaysia usually begins in November.

“The wet season would result in lower harvests, but it is past the peak production cycle anyway,” Arhnue Tan, an analyst at Alliance Investment Bank Bhd, said by phone from Kuala Lumpur. The drop in crude oil prices may cut the appeal of the vegetable oil as biofuel feedstock, she said.

About 6.34 million tonnes of palm oil may be processed into fuel this year, according to researcher Oil World.

Refined palm oil for May delivery was little changed at 6,086 yuan (RM3,140) a tonne on the Dalian Commodity Exchange and soybean oil fell 1.1 per cent to 7,052 yuan.

Soybeans for delivery in January climbed 0.3 per cent to US$12.715 (RM39.86) a bushel on the Chicago Board of Trade, while soybean oil for December gained 0.3 per cent to 40.47 cents a pound. — Bloomberg