KUALA LUMPUR, Jan 18: Malaysian crude palm oil futures fell 1.3 per cent on Friday, erasing gains made the previous day as crude and soyoil markets declined on US economic woes.But palm oil prices, which have see-sawed after hitting an historic high of 3,420 ringgit on Monday, are up close to 9 per cent this year on a supply squeeze due to widespread floods in key growing areas in December.

The benchmark April contract on the Bursa Malaysia Derivatives Exchange finished down 44 ringgit, to 3,316 ringgit ($1,016) a ton.

“Fears about a looming U.S. recession have spilled over from crude and soyoil, which illustrates how palm oil is not exactly immune to the global markets,” said a head trader with a local brokerage. “We could be looking at a global commodities sell-off.” Other traded months fell between 24 and 66 ringgit.

Overall trade rose to 15,802 lots of 25 tons each from about 10,000 lots that usually change hands on a routine day.

Oil held above $90 a barrel on Friday, as bleak economic data heightened concerns the United States would slip into a recession and erode demand from the world’s biggest oil consumer.

US soybean futures on the Chicago Board of Trade closed lower on Thursday after a volatile session that featured an early rally on strong weekly export sales data followed by a sell-off amid economic jitters, traders said.

Softer crude oil prices have a dampening effect on vegetable oil markets such as soyoil and palm oil feedstocks for biodiesel that directly compete with mineral-based diesel.

Traders said red-hot palm prices, which are 3 percent off record highs, will further dent exports during January 1-20. Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will announce estimates for the period on Monday.

In Malaysia’s physical market, crude palm oil for January shipment in the southern region was quoted at 3,325/3,335 ringgit a ton. Trades were done between 3,325 and 3,330 ringgit.—Reuters