KUALA LUMPUR, July 21: Malaysian crude palm oil futures closed lower on Friday, dragged down by profit-taking a day after strong gains on biodiesel news.

It is purely profit-taking, the market was overbought and it is time for a correction, one dealer said.

But the market recovered some of the losses posted during the morning session because of the worsening Middle East situation.

The benchmark third-month October contract on the Bursa Malaysia Derivatives ended down 11 ringgit at 1,580 ringgit ($430) a ton. It was down 15 ringgit at midday.

Other contracts fell between five and 12 ringgit a ton.

Overall volumes stood at 12,799 lots of 25 tons each.

The world's top palm-oil producers, Malaysia and Indonesia, have decided to set aside nearly 40 per cent of their crude palm oil output for biodiesel production.

The announcement, which came on top of Malaysia's strong palm oil exports, helped the benchmark third-month October contract on the Bursa Malaysia Derivatives to close up 3.3pc to 1,591 ringgit a tonne on Thursday.

Exports of Malaysian oil palm products for July 1-20 stood at 713,114 tons, up 8.4 per cent from 658,072 tons shipped between June 1 and 20, cargo surveyor Societe General de Surveillance said.—Reuters