24/03/2009 (Jakarta Globe Business) - Singapore. Palm oil in Malaysia dropped the most in almost two weeks amid expectations that output in Indonesia, the world’s biggest producer of the commodity, would be higher in the second half of the year compared with the first six months.

“Production will be quite strong and lopsided in the second half compared with the first half,” said Alvin Tai, an analyst at OSK Research.

June-delivery palm oil fell as much as 2.56 percent, the most since March 12, to 1,978 ringgit ($545) a ton on the Malaysia Derivatives Exchange. It was trading at 1,980 ringgit at 6 p.m. close in Kuala Lumpur on Tuesday.

Production slid to 1.35 million tons in February from 1.59 million tons in January, Susanto, marketing head of Indonesia Palm Oil Producers Association, or Gapki, said on Friday.

Malaysia’s palm oil exports may fall 13 percent in the first 25 days of March, compared with the same period the previous month, independent surveyor Intertek said.

Exports will probably fall to 871,000 tons in the March 1 to 25 period, it said. Malaysia, the world’s second-biggest producer, exported about one million tons of palm oil in the same period in February, the surveyor said.

Crude oil for May delivery, which can lead palm oil as the tropical commodity can be used to make biofuels, fell as much as 1.3 percent, to $53.12 barrel.

It was trading at $53.26 at 6:47 p.m. Singapore time on Tuesday on the New York Mercantile Exchange.

Bloomberg