KUALA LUMPUR, Dec 18: Malaysian crude palm oil futures fell 0.8 per cent on Tuesday as investors cashed in on the previous session’s strong gains amid weaknesses in crude and soyaoil markets, traders said.

But the prospect of recent rains and floods further affecting harvest and transport of the vegetable oil prevented losses from deepening.

Palm oil, used in products ranging from sun tan lotion and margarine to biofuel, is just 3.8 per cent off a record high of 3,068 ringgit hit in November.

The benchmark March contract on the Bursa Malaysia Derivatives Exchange settled down 25 ringgit at 2,950 ringgit ($881) a ton.

The market was overbought yesterday and the factor of crude and soyaoil was a catalyst for profit-taking, said a senior dealer with a foreign commodities trading firm.

Overall volume more than halved to 5,197 lots of 25 tons each from around 12,000 lots that change hands on a routine trading day.

Floods in Malaysia’s key palm growing regions are likely to reduce December crude palm oil output, the chairman of Malaysian Palm Oil Board said on Tuesday.

Some traders said weaker December production will keep palm oil prices at a premium as buyers scramble to lock in supplies. But other traders say a build-up in stocks in November meant there was ample supply to meet demand.

It is a good thing that November end-stock was at a record high. At most, we will see a draw-down in reserves of around half a million tons, said an analyst with a local broker.

Stocks for November jumped 16.2 per cent to 1.81 million tons, the Malaysian Palm Oil Board said in December.

Exports for Dec. 1-15 were robust with cargo surveyor Intertek Testing Services reporting an increase of 5.9 per cent to 728,067 tons from 687,539 tons.

Oil was steady on Tuesday, after having settled lower for the third consecutive day on hints that Opec could raise output when it meets next in February and amid continuing economic concerns.—Reuters