Palm oil dropped for a third day to a one-week low after data showed that exports from Malaysia declined, boosting concern inventories in the second-largest producer will increase from an eight-month high.

The contract for delivery in February retreated 0.3 percent to end at 2,631 ringgit ($818) a metric ton on the Bursa Malaysia Derivatives in Kuala Lumpur, the lowest price at close since Dec. 3. Futures entered a bull market last month on speculation that production in top supplier Indonesia will drop for the first time since 1998.

Shipments from Malaysia fell 26 percent to 366,898 tons in the first 10 days of December from the same period a month earlier, surveyor SGS (Malaysia) Sdn. said yesterday. Reserves climbed 7.2 percent to 1.98 million tons in November from October, reaching the highest level since March, while exports contracted 8.7 percent to 1.52 million tons, the biggest drop since February, Malaysian Palm Oil Board data showed. Most-active prices advanced for eight of the past nine weeks.

“The recent rise in CPO price may have negatively affected demand,” Ivy Ng, an analyst at CIMB Investment Bank Bhd., wrote in a report, referring to crude palm oil’s initials. “This may have led some consumers to switch.”

Palm’s discount to soybean oil was about $72 a ton today, compared with $297 at the start of the year, according to data compiled by Bloomberg. The price of the tropical oil gained 7.9 percent in 2013, while soybean oil dropped 19 percent.

Palm oil exports may decline further in December, boosting stockpiles in Malaysia to 2.04 million tons by the end of the month, Ng said.

Soybean oil for January delivery climbed 0.7 percent to 40.39 cents a pound on the Chicago Board of Trade. Soybeans advanced 0.4 percent to $13.43 a bushel.

Refined palm oil for May delivery gained 0.3 percent to close at 6,260 yuan ($1,031) a ton on the Dalian Commodity Exchange. Soybean oil climbed 0.4 percent to end at 7,254 yuan.

To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

Source : Bloomberg