KUALA LUMPUR, Aug 12: Malaysian crude palm oil futures fell as much as 4.1 per cent on Tuesday to hit a fresh 10-month low as faltering crude oil prices and expectations of higher global stocks pressured vegetable oil prices.

Palm oil prices, which have slid nearly 13 per cent this year and are down more than 40 per cent from their March peak, may drop even further, reaching the 2,500-ringgit levels sooner than expected, traders said.

The benchmark October contract fell on the Bursa Malaysia Derivatives Exchange as much as 110 ringgit to 2,561 ringgit ($770.9) per ton, breaking well past a key resistance level of 2,600 ringgit for the first time this year. This was the lowest level since October 9, 2007.

“Crude oil sharp fall was the triggering point and it was compounded by news of defaults from India and China,” said a trader with a foreign brokerage. “Now, even Pakistan appears to be delaying some part of its Ramazan purchases.”

“Exports may be recovering but we are not going to see the fantastic increases. There is too much palm oil around,” said another trader.

Malaysia’s crude palm oil stocks fell 2.8 per cent to 1,977,060 tons in July, more than the 2.2 per cent fall estimated in a Reuters’ poll, but still remained near record levels.

Vegetable oil traders were also waiting for an update on the state of US crops from the U.S. Department of Agriculture due later on Tuesday, one of the most significant of the year as it contains the first US soy and corn yield estimates based on actual field surveys.

The average of analysts estimates pegged the US soy crop at 3.001 billion bushels, basically unchanged from USDA’s July forecast of 3.0 billion. US soyoil for September delivery fell nearly 1 per cent in Asian hours as traders awaited the USDA report and crude oil infected sentiment. The most-active January 2009 soyoil contract on China’s Dalian Exchange dropped 0.8 per cent.Indonesian crude palm oil prices fell up to 5.5 percent on Tuesday, tracking faltering Malaysian market but trading was thin with players retreated on the sidelines, waiting prices to stabilise.

In Jakarta, the state marketing centre sold crude palm oil at 6,869 rupiah ($0.749) a kg, a fall of 1.2 per cent from 6,953 rupiah a kg on Monday. Palm oil producers in North Sumatra’s Medan home to Belawan port, which is the key port for palm oil exports sold crude palm oil at 6,740-6,830 rupiah a kg on Tuesday, a fall of up to 5.5 per cent from 7,137 rupiah a kg on Friday.

“It doesn’t matter now whether it’s cheap or expensive, players just want stable prices to take position,” said a dealer in a local plantation firm in Medan.

Refiners in Jakarta offered RBD palm olein, used as cooking oil, at 7,500 rupiah a kg, down from 7,750 rupiah a kg on Monday.—Reuters