KUALA LUMPUR, June 19: Malaysian crude palm oil futures lost 1.7 per cent to hit a one-week low on Thursday on fears of swelling stocks amid slowing overseas demand.

Earlier profit-taking in US crude oil and soyaoil markets also hit palm oil prices, now 21 per cent off a record high of 4,486 ringgit in early March.

The benchmark September contract on the Bursa Malaysia Derivatives Exchange fell 61 ringgit to 3,579 ringgit ($1,098) per ton, a level unseen since June 11. The contract then settled down 40 ringgit at 3,600 ringgit.

Its a bearish phase, stocks are bound to go beyond 2 million tons this month and with the possibility of Indonesia raising export taxes again, more palm oil from there will be shipped into Malaysia, said a head trader with a foreign brokerage.

Dismal demand will drag prices even lower, traders said, especially Indian buying after the government hiked domestic fuel prices in early June.

There is a complete rationing of all kinds of demand after fuel prices in countries like India were raised, said another trader.

Other traded months fell between 9 ringgit and 43 ringgit. Overall trade rose to 13,660 lots of 25 tons each from the usual 10,000 lots.

Cargo surveyors reported up to 13 per cent declines in exports at roughly 600,000 tons for June 1-15, leading to an an excess of palm oil with local millers and refiners, traders say.

The Malaysian Palm Oil Board reported last week that palm oil stocks in May rose 6.9 per cent to 1,913,360 tons.

Oil steadied on Thursday, supported by a further production outage in Nigeria and as a top US investment bank raised its oil price forecast.

July soyaoil at the Chicago Board of Trade fell 0.3 per cent, easing on spillover weakness from crude oil.

The most-active September soyaoil contract at China’s Dalian Commodity Exchange dropped 1.6 per cent.

In Malaysia’s cash market, crude palm oil for June shipment in the southern region was quoted at 3,615/3,625 ringgit. Trades were done between 3,600 and 3,620 ringgit.—Reuters