22/11/2008 (Daily Times), Kuala Lumpur - Malaysian crude palm oil futures tumbled 5.6 percent on Friday following a sharp sell-off in US crude oil, traders said.

The benchmark February contract on the Bursa Malaysia Derivatives Exchange fell as much as 82 ringgit to 1,386 ringgit ($382.8) per tonne by 0233 GMT. “It’s a knee-jerk reaction to the drops in crude oil. If prices continue to fall further, biodiesel is not going to make it unless there are subsidies,” said a trader with local commodities brokerage in the Malaysian capital. Oil tumbled to a 3-1/2-year low below $49 a barrel on Friday, nearing a $100 drop from its July record high, as more distress for the global economy threatened to eat further into demand for fuels.

The December soybean oil contract at the Chicago Board of Trade dropped 2.1 percent in late Asian trading while Dalian Commodity Exchange’s most-active May 2009 soyoil contract slid 4.8 percent.

Global vegetable oil prices usually track crude oil moves as rapeseed and soybean oil are increasingly used to make biodiesel which directly competes with petroleum diesel.