Palm dropped on speculation that a decline in crude oil prices will reduce the demand for biofuels, which use the cooking oil as feedstock.
The contract for July delivery, the most active by open interest and volume, lost as much as 0.7 percent to 2,285 ringgit ($750) a metric ton on the Bursa Malaysia Derivatives, before trading at 2,294 ringgit at 4:14 p.m. in Kuala Lumpur.
Brent crude fell below $100 a barrel for the first time since July amid signs the global economy may slow, curbing fuel demand. Growth in China slowed to 7.7 percent in the first quarter from 7.9 percent in the previous three months, government data showed yesterday. The Standard & Poor’s GSCI Index of 24 commodities fell to the lowest since July.
“The weaker the crude oil price, the biodiesel viability becomes less,” said Ivy Ng, an analyst at CIMB Investment Bank Bhd. “The CPO price has to decline to make it affordable again to convert into biodiesel.”
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