Palm oil rose to the highest level in more than two weeks amid concerns that cooking oil supplies may be reduced by a seasonal drop in output and as dry weather threatens soybean crops in Argentina, the top exporter.

April-delivery futures advanced as much as 2.4 percent to 3,836 ringgit ($1,255) a metric ton on the Malaysia Derivatives Exchange and ended at 3,751 ringgit, the highest closing price since Jan. 7. Prices climbed 1.9 percent last week, ending two weeks of losses.

“Crude palm oil prices will continue to hold up over the first quarter given the existing supply crunch in the oilseed industry,” Bernard Ching, an analyst at ECM Libra Capital Sdn., said in a report today.

Prices of palm and soybean oils have rallied to the highest level in more than two years on concern supplies may tighten as dry weather threatens harvests in Latin America and flooding disrupts oil-palm harvests in Indonesia and Malaysia. Argentina is the biggest producer of soybeans after the U.S. and Brazil. Indonesia and Malaysia are the top palm oil producers. Soybean and palm oils are direct substitutes.

Argentine soybean and corn farmers have faced water shortages since November because of a prolonged drought caused by the La Nina weather event. The weather pattern, which has also caused flooding in Australia and dry weather in the U.S. Great Plains, may last through the Northern Hemisphere summer, Drew Lerner, the president of World Weather Inc., said Jan. 21.

Malaysia’s palm oil output fell 15.5 percent in December to 1.23 million tons, a 10-month low, the Malaysian Palm Oil Board said Jan. 10. The nation’s exports of the commodity climbed 9.7 percent in the first 20 days of January from the same period in December, Intertek said last week. Output in Malaysia typically declines in the first quarter.

Indian Imports

Cooking oil imports by India, the biggest user after China, may drop this month and in February after a jump in futures to a more than two-year peak made overseas supplies more expensive, according to Govindlal G. Patel, managing partner at GG Patel & Nikhil Research Co. Purchases may decline 16 percent to 1.25 million tons in the two months ending Feb. 28 from 1.49 million tons a year earlier, he said.

Soybeans for March delivery gained as much as 1 percent to $14.2650 a bushel and traded at $14.1950 at 6:18 p.m. Singapore time. Soybean oil for the same month jumped 1.6 percent to 58.49 cents a pound.

Palm oil for September delivery on the Dalian Commodity Exchange gained 1.5 percent to 10,008 yuan ($1,519) a ton, the most since Jan. 6. Soybean oil for delivery in the same month rose 1.7 percent to 10,736 yuan, the highest close since Jan. 6.

CME Group Inc.’s April palm oil contract, pegged to the Malaysian benchmark, added as much as 1.3 percent to $1,251.75 a ton and traded at $1,238 a ton at 6:18 p.m. in Singapore.