JAKARTA (June 4): Palm oil posted the biggest intraday drop in nearly a year, tracking recent falls in soybean oil and crude petroleum oil, which have made the tropical oil less attractive for use in biofuels.

Prices in Kuala Lumpur fell 3.8% to RM3,920 a tonne on Tuesday, the deepest intraday drop since late June last year, erasing most of the gains that palm made last week. Trading resumed after a holiday in Malaysia on Monday.

Soybean oil, palm’s closest substitute for food and fuel, halted its drop after falling 3% in Chicago. Crude oil extended losses from the lowest settlement in almost four months, after Opec+’s plan to return barrels to the market earlier than expected, raised concerns about oversupply. On the Dalian Commodity Exchange, refined palm oil fell 0.2%, while soybean oil also extended its decline.

Overnight weakness in crude oil prices and losses in vegetable oil futures in the US and China are weighing on palm oil prices, said Gnanasekar Thiagarajan of Kaleesuwari Intercontinental Ltd. Palm oil could trade between RM3,845 to RM3,995 a tonne this week, he added.