04/10/2010 (Bloomberg) - Palm oil fell the most in more than eight months, tracking losses in soybean oil, which plunged as dry weather allowed farmers in the U.S. to speed up harvests of the oilseed and rains helped crops in Brazil and Argentina.

December-delivery futures lost as much as 2.9 percent to 2,653 ($860) ringgit a metric ton on the Malaysia Derivatives Exchange, the most since Jan. 13, and ended the morning session at 2,665 ringgit in Kuala Lumpur.

“Palm oil is moving in line with soybeans and its oil in Chicago,” Veeresh Hiremath, associate chief analyst at Karvy Comtrade Ltd., said in a phone interview from Hyderabad, India. The price may have further to decline as “the weather concerns, which drove prices higher, are over.”

Soybeans in Chicago fell the most in more than 14 months on Oct. 1 as dry weather allowed U.S. farmers to hasten the pace of the harvest, while rainfall in Brazil and Argentina aided crops. The oilseed for November delivery, which lost 4.5 percent on Oct. 1, declined as much as 1.4 percent to $10.42 a bushel.

December-delivery soybean oil, which shed 2.8 percent on Oct. 1, dropped as much as 0.9 percent to 43.43 cents a pound. The vegetable oil’s premium over palm oil narrowed to $78.8 a ton on Oct. 1, the lowest in more than a week.

Palm oil climbed 15 percent in the quarter ended September as adverse weather disrupted harvests in Indonesia and Malaysia, the largest producers, and damaged oilseed crops from Russia to Canada. Still, Malaysian inventories advanced 23 percent to 1.72 million tons in August from July, ending seven months of decline, according to the country’s palm oil board.

Malaysia’s palm oil shipments rose 30 percent in September from a month earlier to 1.5 million tons, cargo surveyor Societe Generale de Surveillance said last week.

“There are no positives to support palm oil at the moment and the market has factored in the good export performance last month,” Karvy’s Hiremath said. The tropical commodity may trade between 2,635 ringgit and 2,700 ringgit today, he said.

CME Group Inc.’s December palm oil contract, which is pegged to the Malaysian benchmark price, climbed as much as 1.5 percent to $868.50 a ton. The Dalian Commodity Exchange is closed to mark China’s National Day celebrations.