KUALA LUMPUR, Oct 17: Malaysian palm oil futures dropped nearly 2 per cent in a swift reversal as brisk profit-taking pulled the market off record highs hit the previous day, traders said.

Trade was volatile all day, with palm oil prices see-sawing before falling in the afternoon session as players were prompted to cash in after prices of rival soybean oil and crude softened during Asian hours.

The benchmark January contract on the Bursa Malaysia Derivatives Exchange ended down 53 ringgit, or 1.9 per cent at 2,714 ringgit ($804) per ton, after going as low as 2,692 ringgit.

Palm oil struck a record high of 2,791 ringgit on Tuesday, after surging 7 per cent in a four-day winning streak.

Profit-taking can settle in for any reason but in the case of palm oil, the deal-breaker was when soyaoil and crude let off some steam, said one trader.

Overall volume rose to 14,291 lots of 25 tons each from 12,000 lots that change hands on a routine day.

Palm oil and soybean often mirror the gains in crude oils because of their growing use in making biodiesel, which competes with petroleum diesel.

Palm oil is still at a discount compared to crude oil and other vegetable oils, so demand is going to be strong, said one trader. Also, the festival season, especially in Asia, is going on so there is no looking back for palm oil.

This is just a minor setback. Exports of Malaysian palm oil products for October 1-15 rose 6.4 per cent to 671,741 tons on a month earlier, cargo surveyor Intertek Testing Services said.

January palm oil on Singapore’s Joint Asian Derivatives Exchange was untraded.

In Malaysia’s physical market, crude palm oil for October shipment in the southern region was quoted at 2,810/2,830 ringgit a ton. Trades were done between 2,820 and 2,830 ringgit per ton.

—AFP