KUALA LUMPUR: Malaysian palm oil futures fell more than 3% on Monday to their lowest closing price in six months, as weaker crude oil prices and a stronger ringgit weighed on the market.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange closed 129 ringgit, or 3.29% lower at 3,788 ringgit ($857.01) a metric ton, the lowest close since Feb. 2.

The contract fell 0.63% last week, a second consecutive weekly drop. The broader decline in global equity markets has generated negative sentiment and exerted pressure on commodity prices, said a Mumbai-based trader.

“Additionally, the drop in crude oil prices, driven by recession fears in the US, has raised concerns about palm oil demand for biofuels,” the trader added. Oil futures extended losses in a volatile session on Monday as fears of a recession in top oil consumer the United States offset supply worries stemming from mounting tensions in the Middle East, the world’s largest oil-producing region.

Brent crude futures were down 1.90%, to $75.35 a barrel by 1002 GMT. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. The ringgit, palm’s currency of trade, strengthened 1.67% against the dollar, making the commodity more expensive for buyers holding foreign currencies.

Dalian’s most-active soyoil contract fell 0.39%, while its palm oil contract lost 0.23%. Soyoil prices on the Chicago Board of Trade were down 1.47%. Palm oil tracks the price movements of rival edible oils, as they compete for a share of the global vegetable oils market.

Palm oil inventories in Malaysia are expected to drop in July for the first time after rising for three consecutive months, a Reuters survey showed on Monday.

Palm oil stocks in the world’s second-biggest producer were seen at 1.80 million metric tons, down 1.17% from June-end. Exports of palm oil products were estimated to have increased by 26.1% month-on-month to 1.52 million tons, while crude palm oil production was seen at 1.82 million tons in July, a 12.7% increase from a month ago.

Industry regulator the Malaysian Palm Oil Board is scheduled to release its monthly palm oil data on August 12.