JAKARTA, Sept 2: Malaysian crude palm oil futures dropped 7 per cent on Tuesday on faltering crude oil, wiping out their Friday gains as the market resumed trade after a long weekend, dealers said.

Palm oil, used to make products from soap to biodiesel, has fallen about 19.08 per centso far this year as high stocks and news of defaults from key buyers India and China have kept traders on tenterhooks.

The benchmark November crude palm oil contract on the Bursa Malaysia Derivatives Excange plunged 184 ringgit, or 7.0 per cent, to 2,436 ringgit a ton.

I think it is still due to the same reason, the volatility in crude oil prices, said an analyst at a Singapore-based brokerage, who declined to be named.

Traders keep thinking of the link between palm oil and crude oil in the context of using the palm oil as feedstock for biofuel but 90 per cent comes from food, the analyst said.

But the current weakness could be temporary as the demand outlook for palm oil remains robust although buyers are not rushing to boost inventory as they expect prices to fall further, he said.

Oil plunged almost $3 a barrel on Tuesday to its lowest since mid-April, extending the previous day’s rout on initial signs that a weakened Hurricane Gustave spared major Gulf oil facilities.

Cargo surveyor Intertek Testing Services reported on Tuesday exports of Malaysian palm oil products for August rose 8.12 per cent to 1,490,527 tons from 1,378,537 tons shipped in July.

Another cargo surveyor, Societe Generale de Surveillance, said exports of Malaysian palm oil products in August rose 6.6 per cent to 1,488,640 tons compared to a year ago.

People have anticipated the export figures. So there’s no impact on the market, said a dealer in a foreign brokerage firm in Kuala Lumpur.—Reuters