MUMBAI: Malaysian palm oil futures on Wednesday recorded their steepest single-day drop in seven weeks due to slowing exports and concerns about biodiesel demand following a slump in crude oil prices, and tracking weakness in rival soyoil.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange lost 38 ringgit, or 1.69%, to close at 3,672 ringgit ($780.61).

“The market is stressed about the drop in export demand, making traders kind of ignore the production slump,” said a New-Delhi-based edible oil trader.

Exports of Malaysian palm oil products for Dec. 1- Dec. 10 fell 4.1% to 7.4% from the Nov. 1-Nov. 10 period, cargo surveyors said.

Malaysia’s palm oil stocks at the end of November fell for the first time in seven months as production slumped more than exports, data from industry regulator Malaysian Palm Oil Board (MPOB) showed on Tuesday.

The recent drop in soyoil prices has reduced its premium over palm oil, making it increasingly competitive against palm oil, the trader said.

Palm oil ends flat as lower stocks offset slowing exports

Soyoil futures on the Chicago Board of Trade were trading down 0.18% after losing 1.4% in the previous session.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

A sharp drop in crude oil prices over the past month has raised concerns that the demand for palm oil from the biodiesel industry might decrease, a Kuala Lumpur-based dealer said.

Cheaper crude oil makes palm oil a less attractive feedstock for biofuels.

Oil prices extended losses on Wednesday, after falling by more than 3% to six-month lows, on oversupply and demand concerns.

Palm oil may break support of 3,682 ringgit per metric ton, and fall to the Dec. 7 low of 3,641 ringgit, Reuters’ technical analyst Wang Tao said.