KUALA LUMPUR, Aug 2: Malaysian crude palm oil futures closed lower on Wednesday, as funds took profits after a recent rally and prices of rival commodity soyaoil dropped.

People are taking profit, which is expected after the strong gains, said one trader.

But there's a possibility the market will bounce back as the undertone remains firm. The market expects July closing stocks to come down because of strong exports. Societe Generale de Surveillance, a cargo surveyor closely watched by the market, said this week exports of Malaysian palm products in July rose 11.8 per cent from a month earlier.

The benchmark third-month October contract on the Bursa Malaysia Derivatives closed down 31 ringgit, or 2 per cent, at 1,642 ringgit ($447) a ton.

The contract had risen more than 6 per cent over the past week, driven by robust exports and fund buying.

Other contracts fell between 19 and 38 ringgit a ton. Overall volumes stood at 14,883 lots of 25 tons each.

Traders said dry weather in peninsular Malaysia had hit production.

In the physical market, crude palm oil for August shipment saw sellers at 1,615 ringgit a ton and bids at 1,610. Trades were done at 1,615 to 1,625 ringgit a ton.—Reuters