28/04/2010 (Bloomberg) - Palm oil declined for a second day as shares plunged and crude oil fell amid concern that Europe’s debt-laden countries may move closer to default and hurt the world’s economic recovery.

Palm oil for July delivery dropped as much as 0.8 percent to 2,529 ringgit ($786) a metric ton, before closing 0.1 percent lower at 2,547 ringgit on the Malaysia Derivatives Exchange.

“I don’t see any catalysts for crude palm oil prices to strengthen since oil prices are down too,” said Arhnue Tan, a senior analyst at ECM Libra Capital Sdn. in Kuala Lumpur.

Palm oil has tracked crude’s weekly movements for the past 11 weeks as confidence over an economic recovery fueled optimism energy demand will increase, lifting the outlook for biofuels.

The MSCI World Index dropped 2.1 percent yesterday for the worst loss since Feb. 4, and was down 1.1 percent at 6:01 p.m. Singapore time. The MSCI Asia Pacific Index lost as much as 2 percent, the most in seven days.

Concerns over Europe and the stock market slump helped drive crude oil in New York for June delivery down 2.1 percent to $82.44 a barrel for the biggest drop in seven days yesterday. The contract traded at $81.83 a barrel today.

In China, the largest consumer of edible oils, Dalian palm oil dropped 1.4 percent to 6,966 yuan ($1,021) a ton, and paused at 6,990 yuan. Dalian soybean oil lost 1.1 percent to 7,866 yuan.

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

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Soybean oil in Chicago for July delivery lost 0.5 percent yesterday, and was little changed today at 39.54 cents a pound to put its premium over palm oil at $80.25 a ton, near the lowest in more than three weeks, according to Bloomberg data.

The U.S., Brazil and Argentina, the largest producers of soybeans, will contribute to a record crop this year.

The Indonesia Commodity and Derivatives Exchange, the country’s second futures market, deferred the introduction of a local-currency palm oil contract until next month, according to an executive. Indonesia is the largest palm oil producer.

The rupiah-denominated contract, which was to have started trading on April 30, will begin on May 21, said Megain Widjaja, managing director of the exchange. The trading infrastructure needed to be finalized and exchange members also required more time, Widjaja said today.