12/11/2010 (Bloomberg) - Palm oil dropped the most in almost a month on speculation China, the biggest cooking-oil user, may slow purchases after prices climbed to the highest level in more than two years.

January-delivery futures shed 1.3 percent to 3,353 ringgit ($1,076) a metric ton on the Malaysia Derivatives Exchange. The most-active contract slumped 3.7 percent to 3,269 ringgit, the most since Oct. 2, 2009, in intraday trading. January-delivery soybean oil lost as much as 4.5 percent to 52.85 cents a pound in Chicago, the most since Dec. 17.

Palm oil’s decline mirrored losses in other commodities. Cotton, sugar and rubber futures tumbled by the daily limit in China as gains to records were seen as excessive and on concern the country may step up efforts to cool inflation, possibly lowering demand. Copper and zinc also slid.

“China may slow imports of soybeans until March after stocking up enough,” said Ben Santoso, an analyst at DBS Vickers Securities Singapore. “The weakness in soybean oils will reflect in palm oil, which won’t be in great demand during winter months” as the tropical oil clouds in cooler climes.

China’s soybean imports fell 19.6 percent to 3.73 million tons in October from the previous month on a seasonal decline in global supply, according to customs data released Nov. 10.

The country may begin selling stockpiled soybeans from next week to slow gains in food prices, said Cao Huimin, an analyst at China Cereals & Oils Business Net, a researcher in Beijing. The sales may total as much as 2.6 million tons, she said.

Global Supplies

Palm oil has rallied for 11 weeks, the best winning streak since June, 2007, on concern global edible oils supplies will be tight after the U.S. said soybean supplies may be smaller than forecast and production fell in Malaysia. The vegetable oil advanced 5.1 percent this week.

Output in Malaysia, the biggest palm-oil producer after Indonesia, dropped to 14.3 million tons in the 10 months ended Oct. 31, from 14.5 million tons, the nation’s palm oil board said Nov. 10. Soybean inventories before next year’s harvest will be 30 percent less than forecast last month, the U.S. Department of Agriculture said this week.

“Some correction was expected in palm oil after the one- way rally and it’s been mostly because of the strength in the dollar today and speculation China may take steps to control inflation,” Santoso said. “Palm oil may rebound in the first quarter after some correction this month and next.”

In China, palm oil for September delivery plunged 4.4 percent to 9,154 yuan ($1,378) in Dalian, the most in more than 28 months. Soybean oil for September delivery shed 3.6 percent to 9,992 yuan a ton, the most since July 8, 2009.

CME Group Inc.’s March palm oil contract, pegged to the Malaysian benchmark price, fell as much as 0.3 percent to $1,103.25 a ton.