Palm oil declines as rally to eight-month high prompts selling

Palm oil dropped for the first time in four days after a rally to the highest level in more than eight months prompted investors to lock in gains.

The May-delivery contract declined 0.6 per cent to close at 3,250 ringgit ($1,073) a metric tonne on the Malaysia Derivatives Exchange. Futures earlier climbed as much as 0.8 per cent to 3,294 ringgit, the highest price since June 9.

The decline was “because of profit-booking after the steep rise in the recent past,” Vimala Reddy, an analyst at Karvy Comtrade Ltd, said by phone from the Indian city of Hyderabad. “There’s no fundamental factor that supports a decline.”

Crude’s decline also prompted some selling in palm oil, which is also used as a fuel, Reddy said.

Oil fell from a nine-month high after a euro-area industry index unexpectedly declined, signaling a slowdown in demand. April-delivery futures on the New York Mercantile Exchange declined as much as 60 cents, or 0.6 per cent, to $105.65 a barrel today.

Soybeans for delivery in May retreated 0.5 per cent to $12.7075 a bushel today on the Chicago Board of Trade. Soybean oil for delivery in the same month fell 0.4 per cent to 54.25 cents per pound.

Palm oil for delivery in September closed unchanged at 8,366 ($1,329) yuan a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month closed little changed at 9,390 yuan a tonne.