KUALA LUMPUR: Malaysian palm oil futures eased on Monday, tracking a sharp drop in rival Chicago soyoil on Friday after a U.S. Supreme Court ruling on biofuel blending stoked demand concerns, though estimates of a slower growth in output capped losses.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange closed down 19 ringgit, or 0.54%, to 3,501 ringgit ($845.04) a tonne.

Earlier in the day, palm dropped as much as 2.8%. Palm rose 2.8% last week, marking its first weekly gain in three.

The Southern Peninsula Palm Oil Millers' Association estimated production during June 1-25 rose 6% from the month before, slowing from a 13% monthly rise during June 1-20, traders said.

Further weighing on palm prices, state news agency Bernama reported Malaysia would extend a national lockdown beyond Monday to curb the spread of COVID-19, which may hit consumption of the edible oil.

Last week, the U.S. Supreme Court made it easier for small oil refineries to win exemptions from laws requiring them to blend increasing levels of ethanol or other biofuels into their products - a major setback for biofuel producers.

Soyoil prices on the Chicago Board of Trade were up 2.4%, after dropping 4.8% in the previous session. Dalian's most-active soyoil contract gained 0.3%, while its palm oil contract rose 1.9%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.