By Stephanie Phang and Naila Firdausi

April 1 (Bloomberg) — IOI Corp., the world’s second-biggest publicly traded palm oil producer, paced declines in growers across Southeast Asia as prices of the commodity plunged on concern that the supply of a rival edible oil will increase.

IOI, based in Putrajaya, dropped 4.2 percent, or 30 sen, to close at 6.80 ringgit on the Malaysian stock exchange, the biggest fall since March 10. Sime Darby Bhd., the world’s largest producer, fell 2.1 percent and Kuala Lumpur Kepong Bhd. plunged 4.9 percent.

Palm oil futures in Malaysia, the global benchmark, had the biggest drop in nine days today, falling as much as 11 percent to 3,033 ringgit ($950) a ton. The decline came after the U.S. government said farmers will boost soybean planting by 18 percent, potentially increasing the availability of the substitute oil.

“Additional soybean supply is negative for the crude palm oil outlook,” JPMorgan Chase & Co. analysts Aditya Srinath and Simone Yeoh said in a report dated yesterday. “This could open up fresh short-term downside to sector stock prices.”

U.S. farmers will plant 74.8 million acres of soybeans, up from 63.6 million acres last year, the U.S. Department of Agriculture said yesterday. Soybean futures in Chicago slumped today, losing as much as 7.6 percent.

The stock prices of palm oil producers in Singapore and Indonesia also fell.

Goldman’s Buy

The declines may be a good opportunity to buy palm oil shares, Goldman, Sachs & Co. analysts Patrick Tiah and Nikhil Bhandari said in a report today, recommending Singapore-listed Wilmar International Ltd. and Indofood Agri Resources Ltd.

“We would buy on weakness as we remain positive on the long- term fundamentals for the plantations sector, driven by secular growth trend in biodiesel production,” the Goldman analysts said.

Malaysia is the world’s second-largest palm oil producer after neighbor Indonesia. The two nations account for about 90 percent of production of the commodity, which traded at a record last month on increased demand for use in foods, cooking and fuels.

Wilmar International, the biggest vegetable oil supplier, closed 2.4 percent lower at S$4.08, while Golden Agri-Resources Ltd., a unit of Indonesia’s largest oil palm grower, Sinar Mas Group, lost 9.1 percent. Indofood Agri fell 9 percent.

“People, mostly in Europe, prefer soybean oil than palm oil for cooking, so higher output of soybeans will lower soybean oil price and hurt palm oil demand,” said Syafrien Anwar, an analyst at PT Lautandhana Securindo in Jakarta.

PT Astra Agro Lestari, Indonesia’s biggest agricultural company by market value, declined 7.4 percent in Jakarta trading. The Jakarta Agricultural Index, which has 13 members, lost 3.9 percent.

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