24/06/2009 (Jakarta Globe), Kuala Lumpur - Palm oil futures tracked crude oil and soybeans lower on concern the global recession would slow demand for its use as food and fuel.

Soybean oil is a substitute for palm oil, and changes in the price can influence trends in the commodity. The World Bank has said that the global recession this year would be deeper than it predicted in March.

“Crude palm oil price is supported by soybeans” and in the short-term the “price will slightly decline,” Yohan Setio, a plantation analyst at PT Mandiri Sekuritas in Jakarta, said by telephone.

Palm oil for September closed lower at 2,250 ringgit a metric ton on the Malaysia Derivatives Exchange in Kuala Lumpur, while in Jakarta the commodity closed at Rp 6,946 a kilogram (67 cents) on the Jakarta Futures Exchange (JFX).

The world economy will contract 2.9 percent, more than a previous forecast of minus 1.7 percent, the Washington-based World Bank said on Monday. It cut next year’s growth forecast to 2 percent from 2.3 percent.

Vegetable oils, mostly for cooking, can also be used as alternative fuels when fossil fuels are deemed too costly.

Crude oil in New York dropped as much as 1.7 percent to $68.06 a barrel in Asian trading, compared with the year’s high of $73.23 reached on June 11. It was down 0.9 percent at $68.63 at 2:29 p.m. Singapore time.

Analysts, including Nirgunan Tiruchelvam of Royal Bank of Scotland Asia Securities (Singapore), say that $70 a barrel of crude oil is a support for palm oil.

Soybean futures in Chicago for November delivery dropped as much as 1 percent to $9.95 a bushel before trading at $9.985 a bushel at 2:33 p.m. Singapore time in after-hours trading.

Chicago soybean oil for July delivery plunged as much as 2.1 percent to 36.15 cents a pound, and was down 1.4 percent at 36.40 cents at 2:34 p.m. It is the most consumed edible oil after palm oil. -Bloomberg-