KUALA LUMPUR: Malaysian palm oil futures fell more than 1% on Thursday after a three-session rally, although fears of tight supply kept prices near record highs scaled in the previous session.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange slid 59 ringgit, or 1.21%, to 4,813 ringgit ($1,151.99) a tonne in early trade, also taking cues from overnight losses in rival soyoil and crude.
The Malaysian Palm Oil Association estimated September production fell 1.44% from the month before to 1.68 million tonnes, traders said on Thursday. A Reuters poll had pegged production to rise 2.8% to 1.75 million tonnes.
Oil prices dropped for a second session, under pressure from an unexpected rise in US crude stocks that raised concerns over demand after prices rallied to multi-year highs.
Palm soars to record on crude rally, tight supply outlook
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Soyoil prices on the Chicago Board of Trade were up 0.6%, after declining 1.3% in the previous session. The Dalian exchange is closed for a public holiday and will reopen on Friday.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.