23/03/2011 (Bloomberg) - Palm oil fell for a second day on concern that a drop in exports from Malaysia, the second-largest producer, may expand stockpiles of the world’s most used cooking oil.

The most-active June-delivery contract declined as much as 1.7 percent to 3,363 ringgit ($1,109) a metric ton, before ending the morning session at 3,367 ringgit in Kuala Lumpur. Futures rebounded 2.4 percent last week after plunging 8.1 percent in the week ended March 11.

“Malaysia is in the process of trying to rebuild its stockpiles due to the higher demand at the end of last year and lower production,” Ker Chung Yang, an analyst at Phillip Futures Pte, said by phone from Singapore today. “The bearish export data is giving the investors a reason to book a profit from recent gains.”

Palm oil output and stockpiles in Malaysia gained in February from the previous month as adverse weather conditions eased and exports dropped to the lowest in three years, according to the nation’s Palm Oil Board. Inventory of the edible oil climbed 4.2 percent to 1.48 million tons in February, while shipments fell 8.5 percent to 1.11 million tons, the lowest level since February 2008, it said on March 10.

Malaysia’s palm-oil exports fell 12.8 percent in the first 20 days of March to 719,302 tons from a month earlier, independent market surveyor Intertek said yesterday. Shipments slumped 9.5 percent in the same period, rival Societe Generale de Surveillance said.

Global demand for palm oil isn’t expected to pick up in the next few weeks, Phillip Futures’ Ker said.

Indonesia Tax

Indonesia, the world’s biggest producer, reduced the tax for crude palm oil exports in April to 22.5 percent from 25 percent this month and cut the base price to $1,135 a ton from $1,222 a ton, Deddy Saleh, director general of foreign trade at the Trade Ministry, said in a mobile-phone text message.

Palm oil has fallen 14 percent from a 35-month high of 3,967 ringgit on Feb. 10 on speculation of an increase in output this year in Indonesia and Malaysia as yields improve and the La Nina weather event fades.

Soybeans futures ended little changed yesterday on signs that demand is slowing for supplies from the U.S., the world’s largest grower and exporter. Palm and soybean oils are substitutes in food and fuel uses.

Soybeans for May delivery dropped as much as 0.8 percent to $13.525 a bushel on the Chicago Board of Trade today before trading 0.6 percent lower at $13.555 at 12:22 p.m. Singapore time. Soybean oil for delivery in the same month fell as much as 0.6 percent to 55.54 cents a pound.

September-delivery palm oil on the Dalian Commodity Exchange dropped as much as 0.8 percent to 9,200 yuan ($1,403) a ton and was at 9,236 yuan at the midday trading break. Soybean oil for delivery in the same month declined as much as 0.7 percent to 10,000 yuan a ton, before ending the morning session at 10,068 yuan.

CME Group Inc.’s most-active June palm-oil contract, pegged to the Malaysian benchmark price, fell 2 percent to $1,109 a ton at 12:23 p.m. in Singapore.