KUALA LUMPUR, July 16: Malaysian crude palm oil futures lost 2.6 per cent on Wednesday as investors fretted over the lack of momentum in export growth while crude oil fell overnight.

Palm oil -- used in products from soaps to biofuel – is trading about 23 per cent below a record high hit in early March of 4,486 ringgit a ton on account of record inventory levels which are bound to increase further in July, traders said.

By the midday break, the benchmark October contract on the Bursa Malaysia Derivatives Exchange fell 94 ringgit to 3,466 ringgit ($1,075) per ton.

Demand is still not in sight and it’s worrisome. And weaker crude oil markets make palm-based biodiesel a little less attractive, said a trader with a local commodities broker.

Other traded months fell between 38 and 88 ringgit. Overall traded volumes shot up to 13,156 lots of 25 tons from the usual 10,000 lots.

Buyers in China, India and Middle East nations tend to stock up at least two months before the Asian festival season begins in early September.

But so far, exports have been disappointing. Cargo surveyor Intertek Testing Services reported a fall of 7.8 per cent to 515,266 tons for July 1-15 exports from the previous month. Societe Generale de Surveillance revealed a steeper fall of nearly 20 per cent to 485,181 tons.

Oil steadied on Wednesday, after a sharp fall the previous session on expectations that a faltering econony in top energy consumer the United States would hit demand growth.

Indonesian crude palm oil fell on Wednesday, knocked down by losses in the Malaysian market and sentiment was weak without any sign of increase in demand from key buyers.

The state marketing centre in Jakarta sold crude palm oil at 8,963 rupiah ($0.98) a kg, down from 9,077 rupiah a kg on Tuesday. In Jakarta, refiners offered refined, bleached, deodorised (RBD) palm olein used as cooking oil--at 9,100 rupiah a kg, down from 9,200 rupiah a kg on Tuesday.

In Malaysia’s physical market, crude palm oil for July shipment in the southern region was quoted at 3,490/3,500 ringgit a ton. Trades were done at 3,500 ringgit.—Reuters