The March-delivery contract declined 2.7 percent to 3,761 ringgit ($1,226) a metric ton, the most since Dec. 17, on the Malaysia Derivatives Exchange. Futures also had the first weekly drop in three weeks. Prices climbed to a 34-month high on Jan. 4.
Soybean oil’s premium over palm oil contracted to $10.09 a ton yesterday, compared with the 12-month average of $84.7 a ton, according to Bloomberg data. Soybean oil traded at a discount of $14.30 on Jan. 4, the first time since June 2007 that the edible oil has been cheaper than palm.
“The rally has prompted profit-booking among investors and with palm oil at parity with soybean oil, there will be less buying,” said Krishna Reddy, an analyst at Way2Wealth Commodities Ltd. in Mumbai.
Palm oil has rallied 67 percent in the past six months on concern that cooking-oil supplies may tighten as dry weather in Argentina weakened the crop in the largest soybean-oil producer and rains damaged oil-palm harvests in Indonesia and Malaysia.
March-delivery soybean oil shed as much as 1.2 percent to 56.70 cents a pound. Futures jumped 43 percent in 2010 for a second straight annual gain.
“Concerns over the Argentine soybean crops are alive and that should support a rally in prices,” Reddy said.
India Plantations
India, the biggest buyer of palm oil, plans to increase its oil-palm area more than sevenfold as it seeks ways to lower its cooking-fat import bill of $8.4 billion, Farm Secretary P.K. Basu said in an interview yesterday in New Delhi. Plantations may cover 1 million hectares (2.47 million acres) in the next five years, from 130,000 hectares now, he said.
Palm oil for September delivery on the Dalian Commodity Exchange tumbled 2.3 percent to 9,852 yuan ($1,486) a ton and soybean oil for delivery in the same month declined 2 percent to 10,586 yuan a ton.
CME Group Inc.’s March palm oil contract, pegged to the Malaysian benchmark price, declined as much as 0.9 percent to $1,226.75 a ton and traded at $1,228.75 at 4:43 p.m. in Singapore.
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