SINGAPORE: Palm oil futures in Malaysia dropped the most in more than two weeks, tracking declines in crude oil and soybeans, on concern an 11-week rally was too rapid.

“It’s natural for a pullback after this rally,” Yin Shao Yang, an analyst at Maybank Investment Bank Bhd told Bloomberg yesterday.

Futures traded on the Malaysia Derivatives Exchange dropped 3.8% to RM2,684 a tonne, the most since April 27. Prices have surged 84.5% in the past six months.

Among plantation stocks on Bursa Malaysia Securities, IOI Corporation Bhd and Boustead Holdings Bhd fell six sen each to RM4.40 and RM3.54. Kuala Lumpur Kepong Bhd and TSH Resources Bhd fell 10 sen each to RM11.20 and RM1.70 while IJM Plantations Bhd lost seven sen to RM2.45.

Sime Darby Bhd, United Plantations Bhd and Chin Teck Plantations Bhd bucked the trend, rising five sen to RM6.55, 10 sen to RM10.80, and 15 sen to RM6.75, respectively. Hap Seng Plantations Holdings Bhd gained one sen to RM2.10.

The benchmark Kuala Lumpur Composite Index fell 1.06% or 10.85 points to close at 1,011.99.

Bloomberg reported that palm oil had gained amid concern that global vegetable oil supplies may be tighter than expected.

US stockpiles of soybeans, crushed to produce rival edible oil, are forecast at a five-year low for the year ending August, the Department of Agriculture said this week. Argentina, the biggest soybean oil supplier, is facing its worst drought in more than four decades.

Rising demand for palm oil, a substitute for soybean oil, has pared inventories in Malaysia, the second-biggest producer. Stockpiles in April fell to near a two-year low of 1.29 million tonnes, and are 43% lower than a November record, according to Malaysian Palm Oil Board data.

Palm oil prices may stay high as the commodity “responds better to supply shocks than to demand shocks”, Maybank’s Yin said. “Prices could stay high for quite a while.”

Soybean oil traded in Chicago dropped 1.1% to 38.75 cents a pound at 6pm Singapore time. The commodity this week rose to more than 40 cents a pound for the first time since October. Soybeans in Chicago dropped 0.7% to US$11.205 (RM39.44) a bushel at 6.01pm Singapore time. Crude oil in New York dropped for a second day, losing 1.6% to US$57.09 a barrel at 6pm Singapore time.