JAKARTA: Malaysian palm oil futures dropped on Thursday after oil prices fell, making palm a less attractive option for the biodiesel feedstock, while investors monitored developments from meetings in Europe on the war in Ukraine.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 4.02% to 5,943 ringgit ($1,406.96) per tonne by closing time, erasing some of the roughly 10% gain it posted over the past three sessions.

Palm rose as much as 2.3% earlier in the session before reversing course after U.S. crude prices turned negative as investors assessed the potential for new supply in tight markets amid prospects of a new Iran deal.

The drop in palm was triggered by movement in external markets such as crude oil prices, a trader in Kuala Lumpur said, adding that some investors were squaring positions ahead of US President Joe Biden’s meeting with NATO allies.

Biden arrived in Brussels for a series of summit meetings on the Ukraine war, with Washington set to announce a U.S. package of Russia-related sanctions on political figures and oligarchs on Thursday.

Ukraine is a major producer of sunflower oil and the war has removed some supply of the edible oil from the market. Meanwhile, Dalian’s soyoil contract pared gains and posted a 0.58% rise, while its palm oil contract rose 0.78%. Soyoil prices on the Chicago Board of Trade fell 1.26%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market. Markets are also awaiting Malaysian palm exports data and Indonesia’s export tax for April to gauge stock condition and demand ahead, another trader said.