JAKARTA, Nov 11: Malaysian palm oil futures fell more than 2 per cent on Tuesday on weaker crude oil and concern over a build up in supply as demand fades, traders said.

Refined palm oil — used in products from biofuel to soap — has fallen about 65 percent from a peak of 4,486 ringgit in the past nine months on easing crude palm oil prices, tight credit, higher supplies and weak demand from China and India.

The benchmark January contract on the Bursa Malaysia Derivatives Exchange settled down 40 ringgit, or 2.52 per cent to 1,586 Malaysian ringgit ($443) per ton on the day after trading as low as 1,571 ringgit.

Exports are dwindling, stocks are higher, defaults are mounting again. We are sitting in a box of dynamite that is going to explode anytime, said a leading dealer in Kuala Lumpur.

Other traded contracts were also down between 2.46 per cent to 4.8 per cent. Overall trading volume stood at 10,824 lots of 25 tons each. Comments from leading analyst Dorab Mistry also put a downward pressure on the market, dealers said.

Malaysian crude palm oil futures could slide by a quarter to 1,200 ringgit a ton if US crude oil prices decline to $50 a barrel and the health of the global economy worsens, Mistry said on Tuesday. US crude was around $60 on Tuesday.

Dealers noted buying interest from China ahead of Chinese New Year next year but it may not be sufficient to ease stocks as demand from other key buyers such as India and Europe.

Malaysian crude palm oil stocks rose 6.9pc in October to a record 2,086,452 tons from a revised 1,951,417 tons in September, official crop agency Malaysian Palm Oil Board said on Monday.

Indonesia palm oil prices rose on Tuesday as a weaker rupiah against the US dollar offered support on local prices despite a falling Malaysian market.

The state marketing centre in Jakarta, which sells palm oil from state plantations, said it sold at 5,123 rupiah ($0.454) a kg, up from 5,053 rupiah a kg on Monday.

Producers in Medan -- home to Belawan port, Indonesia’s key port for palm oil exports -- sold crude palm oil at 4,990-5,140 rupiah a kg, up from 4,830-4,860 rupiah a kg last week, a trader said.

Refiners in Jakarta sold refined, bleached, deodorised palm olein, which is used in cooking oil at around 5,750 rupiah a kg, up from 5,675 rupiah a kg.—AFP