Malaysian crude palm oil futures dropped 1.7 percent on Tuesday, drawing back from a record high hit the day before as players seized the opportunity to sell after crude and soyaoil markets declined in Asian trade.
The market fell past the 3,000 ringgit level on talk that exports will take a huge hit due to the red hot palm prices, which are up nearly 50 percent this year.
The February contract on the Bursa Malaysia Derivatives Exchange settled down 53 ringgit at 2,985 ringgit ($885) per tonne. The contract has lost 83 ringgit since hitting a record high of 3,068 ringgit on Monday.
"Soyaoil and crude have been toppish for the past few days and with the Opec meeting next week pointing to a supply increase, the bubble has deflated somewhat for palm oil," said a dealer with a foreign commodity brokerage.
Other traded months fell between 13 and 56 ringgit. Overall trade stood at 8,999 lots of 25 tonnes each. Both palm oil and soyaoil closely track the crude oil market, which is in sight of $100 a barrel milestone, as both edible oils are increasingly touted as a feedstock for cheaper biofuel.
Oil fell below $97 a barrel on Tuesday as investors bet that the Opec exporter group will boost supply for a second time this year at a meeting next week to cool near-record prices. US oil dropped $1.10 to $96.60 a barrel. London Brent crude fell by 90 cents to $94.42. December soyaoil on the Chicago Board of Trade ended 0.02 cent higher at 46.69 cents per lb in volatile trading, hitting a 33-year top overnight then sliding during the day session when crude oil tumbled.
The contract fell a further 0.29-cent at 46.46 cents per pound on Tuesday's Asian trade. Exports of Malaysian palm oil products for November 1-25 rose 0.7 percent to 1,126,683 tonnes from 1,119,011 tonnes shipped between October 1-25, cargo surveyor Intertek Testing services said on Monday.
Another cargo surveyor, Societe General de Surveillance, said exports in the same period fell 0.4 percent to 1,107,615 tonnes. In Malaysia's physical market, crude palm oil for November and December shipments in the southern region was quoted at 3,000/3,020 ringgit a tonne. Trades were done between 3,010 and 3,040 ringgit.