Malaysian palm oil futures dipped 1% on Tuesday after two days of gains, but higher prices of rival edible oils limited losses.
The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange was down 1% at 2,602 ringgit ($628.81) by the end of the trading session.
"The drop was perhaps due to technical selling since we are unable to hit a new high today and yesterday was overbought," said a Kuala Lumpur-based trader.
The contract rose to a near two-year high in the previous session at 2,657 ringgit a tonne on a Malaysian Palm Oil Board announcement that stockpiles and production in October unexpectedly dropped.
Stockpiles stood at 2.3 million tonnes at the end of October, down 4.1% from the previous month, while output was down 2.5% at 1.8 million tonnes from the previous month.
This compared with prediction of a 2% rise in Malaysian palm oil output in October to 1.88 million tonnes, according to a Reuters poll.
Palm's losses were, however, limited by a rise in rival oil prices.
Dalian's January palm oil contract last traded 1.7% higher, while the soyaoil contract rose 0.4%.
The US soyaoil futures on the Chicago Board of Trade BOc2 were down 0.4%.
Palm oil is affected by price movements in related oils as they compete for share in the global vegetable oils market.
Palm oil FCPOc3 may retrace into a range of 2,543-2,573 ringgit per tonne, as it faces a strong resistance at 2,666 ringgit, Reuters analyst Wang Tao said.
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