Palm Oil Drops a Third Day, Tracking Crude on Recovery Concerns

April 29 (Bloomberg) -- Palm oil slumped for a third day as shares plunged and crude oil declined amid concern that the debt problems in Greece and Spain may weaken the euro and derail the world’s economic recovery.

The contract for July delivery fell as much as 1.1 percent to 2,520 ringgit ($786) a metric ton on the Malaysia Derivatives Exchange and paused at 2,525 ringgit at the midday break.

“Crude palm oil seems to be trading in line with oil,” said Nirgunan Tiruchelvam, a commodities analyst at The Royal Bank of Scotland Asia Securities (Singapore) Pte.

Palm oil has tracked crude’s weekly movements for the past 11 weeks as confidence over an economic recovery fueled optimism energy demand would rise to boost demand for biofuels.

Crude oil prices in New York have fallen 2.3 percent this week amid concerns over the euro and the slump in equities. It traded at $83.17 a barrel at 11:59 a.m. Singapore time. The MSCI World Index declined for a third day, chalking up losses of 2.8 percent during the period.

In China, the largest consumer of edible oils, Dalian palm oil dropped a second day, losing 0.4 percent to pause at 6,938 yuan ($1,016) a ton at the 11:30 a.m. trading break. Dalian soybean oil lost 0.4 percent to 7,838 yuan per ton.

China’s soybean imports between April and June may reach a record 14 million tons, the China National Grain & Oils Information Center said yesterday. Inbound shipments of palm oil may total 318,000 tons in April, it said.

Soybean oil in Chicago for July delivery rose 0.3 percent to 39.04 cents a pound for the first gain in four days, putting its premium over palm oil at $72.25 a ton, according to data on the Bloomberg. Yesterday, the premium narrowed to a three-week low of $66.32 a ton, less than half the 12-month average of $130.45, the data shows.