The year-long trade war between the world's two biggest economies boiled over on Monday, as Washington accused Beijing of manipulating its currency after China let the yuan drop to its lowest point in more than a decade.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was down 0.4% at 2,085 ringgit ($498.33) per tonne at the midday break on Tuesday.

"The market is lower tracking overnight losses in CBOT soyoil, but I think the downside can be limited as the ringgit is quite weak," said a Kuala Lumpur-based futures trader.

Weakness in the ringgit, palm's currency of trade, usually supports the edible oil by making it cheaper for foreign buyers.

The ringgit, currently trading around two-month lows, was last down 0.2% against the dollar at 4.1850. Another palm oil trader said the losses were mainly due to the huge selloff on Monday following a sharp fall in China's yuan.

Global stocks extended losses on Tuesday, after Washington designated Beijing a currency manipulator and further rattled fragile investor sentiment in a rapid escalation of the U.S.-China trade war.

U.S. soyoil futures on the CBOT had fallen 1.6% on Monday, but were up 0.6% as of 0527 GMT on Tuesday.

Traders said the news about China halting purchases - along with a weaker Brazilian currency, potentially making South American supplies more attractive to oilseed importers - dragged on soybean futures on Monday.

Grain prices, however, rose on Tuesday on weather concerns in the United States.

Meanwhile, the September soyoil contract on the Dalian ,exchange rose 1.3% and the Dalian September palm oil contract gained 0.5%.