KUALA LUMPUR, March 6: Malaysian crude palm oil futures fell more than 3 per cent on Thursday, as slow demand in the physical market and strengthening ringgit prompted selling.

Palm oil, which has lost more than 10 per cent since it hit a historic high of 4,486 ringgit a ton on Tuesday, bucked its usual trend of tracking crude oil and Chicago soyabean oil markets, dealers said.

The benchmark May contract on the Bursa Malaysia Derivatives Exchange fell as much as 137 ringgit, or 3.3 per cent, to 3,958 ringgit ($1,244) a ton. It finished at 4,003 ringgit a ton.

The physical buying is very slow and the market is trying to come down to attract buyers who have vanished from the market because of the volatility in the last few days, said one dealer with a domestic brokerage.

Traders said the rising Malaysian ringgit against the dollar also contributed to the market’s decline.

The Malaysian ringgit hit its highest level in more than a decade on Thursday on heightened expectations of a US rate cut in March after weak US economic data.

The ringgit rose 0.3 per cent to hit 3.17 per dollar, its highest since October 1997.

A stronger Malaysian currency makes the ringgit-based commodity expensive for overseas buyers.

Chicago Board of Trade soyaoil was up 0.2 per cent, while China’s Dalian soyabean oil futures September contract finished down 3.2 per cent.

Global vegetable oil prices often track energy markets as rapeseed and soyabean oils get channelled into biodiesel in Europe and America.

Oil held near $104 on Thursday, retaining most of the previous day’s gains to record highs due a drop in US oil inventories and Opec’s decision to leave output unchanged.

In Malaysia’s physical market, crude palm oil for March shipment in the southern region was quoted at 3,990/4,040 ringgit a ton. Trades were done at 4,040 ringgit.—Reuters