KUALA LUMPUR, Feb 12: Malaysian crude palm oil futures ended 1.1 per cent lower on Tuesday, erasing earlier gains as soyaoil prices moderated in Asian trade and fears of a sustained growth in output compelled investors to cash in.

The market ignored a statement by the Malaysian commodities minister that the Southeast Asian country hoped to introduce palm-blended biodiesel this year and his forecast for lower 2008 production of the vegetable oil.

Palm oil is 2.4 per cent off an historic high of 3,458 ringgit hit last week but has been see-sawing in tandem with volatile crude and other vegetable oil markets.

The benchmark April contract on the Bursa Malaysia Derivatives Exchange settled down 37 ringgit at 3,375 ringgit ($1,042) a ton, after swinging from an intra-day high of 3,446 ringgit.

Malaysia’s crude palm oil production was expected to fall 1.3 per cent to 15.6 million tons in 2008 from 15.8 million tons a year ago, Commodities Minister Peter Chin told Reuters in an interview.

Other traded months ranged between a rise of 5 ringgit to a 41 ringgit decline. Overall trade fell to 7,952 lots of 25 tons each from the usual 10,000 lots. The contract ended lower the previous day but was supported by crude oil’s climb.

Exports of Malaysian palm oil products for Feb. 1-10 seemed to withstand the surging prices with cargo surveyors Intertek Testing Services and Societe Generale de Surveillance reporting marginal increases.

January palm oil stocks in Malaysia are likely to rise 8.2 per cent to 1.82 million tons, the highest in at least 25 years as exports fall sharply on record high prices, a Reuters poll showed last week.

Official palm oil production, stocks and export figures for Jan will be released on Feb. 13.

In the physical market, crude palm oil for February shipment in the southern region was quoted at 3,380/3,410 ringgit a ton. Trades were done between 3,390 and 3,420 ringgit.—Reuters