KUALA LUMPUR: Malaysian palm oil futures extended losses on Tuesday after the contract closed at six-month lows in the previous session, as weakness in rival Dalian and Chicago contracts weighed.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was down 28 ringgit, or 0.74%, to 3,759 ringgit ($842.64) a metric ton by the midday break.

The contract fell more than 3% on Monday to its lowest close since Feb. 2.

Malaysian palm oil futures opened gap lower following a sharp selloff in soyoil on the Chicago Board of Trade and in Euronext rapeseed futures overnight, as well as in Chinese vegetable oil futures in Asian hours on Tuesday, said Anilkumar Bagani, commodity research head at Mumbai-based Sunvin Group.

“However, the slightly stronger Malaysian ringgit and the upward recovery in energy markets and the Asian equity markets injected some confidence in palm oil,” Bagani said.

“The futures were seen recovering from the early selloff but still in negative territory.”

Palm oil declines as weaker crude oil, firmer ringgit weighs

Dalian’s most-active soyoil contract was down 2.13%, while its palm oil contract lost 3.05%. Soyoil prices on the Chicago Board of Trade were down 1.42%.

Palm oil tracks price movements of rival edible oils, as they compete for a share of the global vegetable oils market.

The ringgit, palm’s currency of trade, weakened 1% against the dollar, making the commodity less expensive for buyers holding foreign currencies.

Oil prices rebounded by more than 1% on Tuesday, paring previous session’s losses, on supply concerns amid an escalating Middle East conflict, stronger U.S. services sector data and a cut in production at Libya’s Sharara oilfield.

Brent crude futures gained 1.19% to $77.21 a barrel by 0533 GMT. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

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.

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

Palm oil is expected to retest support at 3,745 ringgit per metric ton, a break below could open the way towards 3,705 ringgit, Reuters technical analyst Wang Tao said.