Palm oil gained as a three-day decline in prices spurred investors to buy the commodity and as soybeans climbed on U.S. planting delays.

August-delivery palm oil advanced 1.3 percent to 3,403 ringgit ($1,128) a metric ton on the Malaysia Derivatives Exchange. Prices fell 2.3 percent in the previous three days.

There is some “mild short-covering” after the three-day decline, said Paramalingam Subramaniam, director of Kuala Lumpur-based brokerage Pelindung Bestari Sdn. Short-covering refers to investors reversing bets on declining prices.

Palm oil’s decline was fueled by slower export growth from Malaysia, the second-largest producer, and an improving production outlook. Malaysia’s output in April expanded 8 percent to 1.53 million tons from March, the nation’s palm oil board said on May 10. It will report May data on June 10.

“Despite rising crude palm oil supply in April, prices have not softened as much, as the supplies were quickly absorbed by the market,” Penny Yaw and Margarett Go, analysts at Citigroup Inc., said in a report yesterday. “Global demand for palm oil has picked up as crude palm oil prices are relatively more attractive versus competing vegetable oils.”

Soybean oil’s premium over palm was at $166.36 a ton today, compared with the average of $111.74 this year. Palm oil and soybean oil are substitutes in food and fuel uses.

Soybean Supply

“While rising inventory levels at home point toward weakening prices, concerns on soybean supplies are still keeping oilseeds, including palm oil, from making sharp corrections,” Bernard Ching, an analyst at ECM Libra Capital Sdn., wrote in a report yesterday.

Excessive rains in the Midwest, the largest corn and soybean-growing region of the U.S., made fields too soggy for farm machinery, delaying planting. U.S. soybean planting was 51 percent complete as of May 29, behind the five-year average of 71 percent, the Department of Agriculture said.

Cooking-oil imports by India, the biggest user after China, may rebound next year as record prices prompt farmers to devote more area to cotton than oilseeds, according to Govindlal G. Patel at G.G. Patel & Nikhil Research Co.

India meets about 50 percent of its cooking-oils requirement through imports and increased shipments may extend a rally that’s seen palm oil futures jump 37 percent in the past year in Malaysia.

Soybeans for July delivery gained as much as 0.5 percent to $13.93 a bushel in Chicago before trading at $13.925. Soybean oil for delivery in the same month advanced 0.4 percent to 58.69 cents a pound.

January-delivery palm oil on the Dalian Commodity Exchange gained 0.3 percent to close at 9,292 yuan ($1,433) a ton. Soybean oil for delivery in the same month increased 0.6 percent to 10,360 yuan a ton at the close.

CME Group Inc.’s most-active September palm-oil contract, pegged to the Malaysian benchmark, rose 0.4 percent to $1,112 per ton.