KUALA LUMPUR, Aug 1: Malaysian crude palm oil futures tumbled as much as 3.8 per cent on Friday as profit-taking swept across agriculture markets following heavy losses in crude oil, traders said.

Chicago soyaoil for August delivery fell 1.6 per cent with the soyabean complex much lower, while the most active January 2009 contract on China Dalian Commodity Exchange dived 3.3 per cent.

But declines in palm oil were more acute due to swelling stock levels despite a revival in overseas shipments last month.

The benchmark October contract on the Bursa Malaysia Derivatives Exchange fell as much as 115 ringgit to 2,948 ringgit ($935). The contract was settled down 100 ringgit lower at 2,950 ringgit.

Palm oil is retracing its declines after recovering over the last two days because near record level palm oil stocks cannot be ignored, said a trader with a foreign commodities brokerage.

Malaysia’s July palm oil stocks are likely to slip nearly one per cent from record levels a month before as surging shipments outstripped modest growth in output, a Reuters poll showed on Wednesday.

The market is poised to go even lower next week, especially if US weather is conducive, which will suggest a glut in soybean and soyaoil supplies. US weather in August is key to soybeans, as it is the time when the plants set pods that determine yield and production.

Other traded months fell between 80 ringgit and 115 ringgit. Overall volume stood at 10,136 lots of 25 tons each.

Traders said commodities markets were going through a liquidation phase following the sharp decline in oil futures that have slid from a record high above $147 a barrel to below $123 on Friday as high prices dented demand.

But overseas demand for palm oil has just started to flood in with buyers in China, European Union and Middle East nations making up the bulk of shipments for July, data from cargo surveyors show.

Malaysia fell sharply today. It should drag local prices lower but buyers need cargoes and they dare to pay higher, said an auction official at the centre which sells palm oil from state plantations.

In Malaysia’s physical market, August crude palm oil was offered at 2,960/2,980 ringgit in the southern region.—Reuters