KUALA LUMPUR, Aug 15: Malaysian crude palm oil futures plunged 8.7 per cent on Friday to an 11-1/2-month low as falling crude knocked vegetable oil markets, prompting Chinese and Indian traders to renege on palm contracts.

Cargo surveyors on Friday signalled a strong recovery in Malaysian exports, but investors focused instead on market talk that China, the world’s largest vegetable oil buyer, had washed out on 800,000 tons of palm contracts in the past few weeks.

The market is quite unstable, there is no knowing where the prices are going to stabilise. The story of defaults is bound to play out again next week, said a trader with a local brokerage.

The benchmark crude palm oil October contract pulled back by the close to stand down 6.4 per cent at 2,453 ringgit.

The most-active January 2009 soyaoil contract on China’s Dalian Commodity Exchange hit limit down and September soyaoil at the Chicago Board of Trade dropped 3.1 per cent during Asia trading.

Palm oil prices have plummeted 21 per cent so far this year, reaching nearly half of March’s peak and knocked out by a combination of weak crude oil markets and vegetable oil markets along with swelling global vegetable oil stocks.

Exports of Malaysian palm oil products for Aug. 1-15 rose 30.7 per cent to 673,264 tons from 515,266 tons shipped between July 1 and 15, cargo surveyor Intertek Testing Services said on Friday.

Palm oil producers in North Sumatra’s Medan — home to Belawan port, which is the key port for palm oil exports — did not hold any auction on Friday.

Refiners in Jakarta offered RBD palm olein, used as cooking oil, at around 7,200 rupiah a kg, down from 7,450 rupiah on Thursday. Indonesian markets will be closed on Monday for a national holiday.

In the physical market in Malaysia, crude palm oil for delivery in August and September were called at 2,460/2,550 ringgit a ton in southern and central region.—Reuters