Palm oil dropped from the highest close in more than 16 months on concern supplies are improving and as U.S. soybean stockpiles are forecast to increase from a year earlier. Soybeans declined. December-delivery futures lost as much as 1.1 percent to 2,706 ringgit ($877) a metric ton on the Malaysia Derivatives Exchange and were at 2,708 ringgit at 12:04 p.m. local time in Kuala Lumpur. Yesterday, futures finished at the highest level since May 13, 2009. Palm oil may trade between 2,700 ringgit and 2,800 ringgit next week and “will peg close to soybeans,” Arhnue Tan, a senior analyst at ECM Libra Capital Sdn., said. Prices could fall as low as 2,500 ringgit by the end of the year, she said. Soybeans traded in Chicago fell a second day, losing as much as 0.9 percent to $11 a bushel and traded at $11.03 at 12:09 p.m. Singapore time. Yesterday’s drop was the biggest since Aug. 19. Soybean and palm oils are substitutes. The U.S. Department of Agriculture is scheduled to update its estimates for soybeans and wheat inventories tomorrow, with reserves of the oilseed forecast to reach 151 million bushels as of Sept. 1, from 138 million a year earlier, according to a survey of 19 analysts by Bloomberg News. Palm oil has climbed for four straight weeks as demand increased before festivals and as excess rain hurt harvests, causing stockpiles to drop in the seven months through July. Malaysian palm oil reserves climbed in August, jumping 23 percent to 1.72 million tons from July, as output rose a fourth month, the country’s palm oil board said Sept. 15. CME Group Inc.’s December palm oil contract, pegged to the Malaysian benchmark price, lost 0.7 percent to $880.25 a ton. On the Dalian Commodity Exchange, May-delivery palm oil slumped 1.8 percent to 7,686 yuan ($1,149) a ton at 11:30 a.m. To contact the reporters on this story: Claire Leow in Singapore at cleow@bloomberg.net; To contact the editor responsible for this story: James Poole at jpoole4@Bloomberg.net.

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