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By Ranjeetha Pakiam May 30, 2013 Palm oil declined from a seven-week high as crude oil traded near the lowest price in four weeks, cutting the appeal of vegetable oils as biofuel feedstock. The contract for August delivery fell 1.1 percent to close at 2,372 ringgit ($772) a metric ton on the Bursa Malaysia Derivatives, the biggest decline for the most active futures since April 29. Futures ended at 2,399 ringgit yesterday, the highest level at close since April 8. West Texas Intermediate crude fell to $92.59 a barrel after an industry report showed U.S. stockpiles rose the most in a month. The contract closed at $93.13 yesterday, the lowest since May 1. A record 5.6 million tons of palm was used for fuel in 2012, according to Oil World, a Hamburg-based research company. “The drop in crude prices makes biodiesel less desirable and therefore there’ll be selling pressure on crude palm oil,” said Sim Han Qiang, an analyst at Phillip Futures Pte. Palm oil for physical delivery in June was at 2,350 ringgit today, according to data compiled by Bloomberg. Futures are up 3.8 percent in May, heading for the first monthly gain in four. The decline in soybean oil prices may also damp demand for palm, Sim said. Soybean oil’s premium over palm oil was $297.56 a ton today, compared with an average of $322.89 this year, according to data compiled by Bloomberg. The vegetable oils are substitutes in food and fuel. Soybean oil for July delivery lost 0.3 percent to 48.51 cents a pound on the Chicago Board of Trade, extending a 1.8 percent decline yesterday. Soybeans dropped 0.3 percent to $14.9775 a bushel. Refined palm oil for September delivery fell 0.9 percent to close at 6,144 yuan ($1,002) a ton on the Dalian Commodity Exchange, while soybean oil lost 0.7 percent to 7,484 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: Jake Lloyd-Smith at jlloydsmith@bloomberg.net Continue reading →