KUALA LUMPUR, Dec 6: Malaysian crude palm oil futures fell as much as 2.5 per cent on Thursday to a five-week low, reeling after steep declines in crude and soyoil markets.

Investor anxiety about palm oil stockpiles building up amid a slowdown in exports continued to suppress appetite for the edible oil, traders said.

The benchmark February contract on the Bursa Malaysia Derivatives Exchange fell as much as 72 ringgit to 2,838 ringgit ($849), a level not seen since October 31.

The contract settled down 60 ringgit at 2,850 ringgit.

Palm oil, used in products ranging from ice-cream and body lotion to biofuel, is now 7.1 per cent off a record high of 3,068 ringgit set last week.

Palm oil should have rallied a little on Opec’s decision to keep crude oil output levels unchanged but the United States crude inventories have been rising, said a dealer with a foreign commodities trading firm.

And the situation is made worse by talk that palm oil production may increase by double-digits while it is a known fact that exports are going to slow down further because of prices. Other traded months fell between 44 and 72 ringgit.

Overall trade stood at 9,825 lots of 25 tons each. Oil fell by more than a dollar on Thursday on a healthy build in US oil product stocks.

Inventories were cited by the Organization of the Petroleum Exporting Countries when they kept output levels unchanged for the peak winter demand season.

Crude oil markets increasingly influence prices of vegetable oils such as soyaoil and palm because of use of edible oils in making biofuels which compete with petroleum.

Palm oil is still is up nearly 43 per cent this year and exports have weakened as a result, with cargo surveyors Intertek Testing Services and Societe Generale de Surveillance reporting marginal declines in demand for November.

Malaysian palm oil stocks were up 9 per cent at end-November as a slight decline in exports and an increase in production lifted supplies, a Reuters poll showed on Thursday.

Palm oil output in Malaysia, one of the world’s top producers, rose 5 per cent to 1.66 million tons, according to a median estimate of five plantation houses polled by Reuters.

In Malaysia’s physical market, crude palm oil for December and January shipments in the southern region were quoted at 2,850/2,860 ringgit a ton.

—Reuters