JAKARTA, Nov 12: Malaysian palm oil futures closed nearly 3 per cent lower on Wednesday after recouping some early losses on short-covering, traders said.

The early sell-off was sparked by crude oil’s extended losses after settling below $60 for the first time in 20 months on Tuesday on demand worries, traders said.

The benchmark January contract on the Bursa Malaysia

Derivatives Exchange fell 47 ringgit, or 2.96 per cent, to 1,539 ringgit ($429) per ton. The contract hit a low of 1,505 ringgit per ton earlier.

Other traded contracts dropped between 44 ringgit and 80 ringgit.

The overall volume stood at 8,207 lots of 25 tons each.

In Asian trading, crude oil was down $0.98 to $58.35 per barrel by 1024 GMT, off a low of $57.70.

The most active December soybean oil contract was down 0.30 cents, or 0.89 per cent, at 33.43 cents per pound.

Traders said they feared that palm oil prices have yet to fully price in current weakness in crude oil prices.

When palm hit its recent low of 1,331 ringgit per ton (on Oct. 28), crude price was still above $60 a barrel.

Now crude is below $60, so I think palm will go down further, said a trader at a Kuala Lumpur-based brokerage firm.

Malaysian crude palm oil stocks rose 6.9 per cent in October to a record 2,086,452 tons from a revised 1,951,417 tons in September, official crop agency Malaysian Palm Oil Board said on Monday.

In Indonesia, the world’s largest crude palm oil producer, prices of the commodity fell on Wednesday, tracking Malaysian palm futures.

The state marketing centre in Jakarta, which sells palm oil from state plantations, said it sold at a top price of 5,078 rupiah per kg ($0.44), down from 5,123 rupiah on Tuesday.

Producers in Medan -- home to Belawan port, Indonesia’s key port for palm oil exports -- did not sell crude palm oil on Wednesday.

On Tuesday it sold crude palm oil at 4,990-5,140 rupiah a kg.

Meanwhile, refiners in Jakarta sold refined, bleached, deodorised (RBD) palm olein, which is used in cooking oil at around 5,800 rupiah, little changed from 5,750 rupiah a kg on Tuesday, supported by a falling rupiah.—Reuters