KUALA LUMPUR: Malaysian palm oil futures gave up early gains on Wednesday to snap a three-day rally, as sluggish demand weighed on market sentiment even as industry estimates showed a steep drop in production.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed 27 ringgit lower, or 0.53%, at 5,042 ringgit ($1,205.07) a tonne, after rising 0.8%.

Prices are holding due to low production but demand is weak as palm oil is losing market share to soft oils in the physical market, a Kuala Lumpur-based trader said.

India’s palm oil imports in December fell 27% from a year ago as a steep rally in prices reduced its discount to rivals, prompting refiners to increase imports of soyoil and sunflower oil, the Solvent Extractors’ Association of India said.

The Southern Peninsula Palm Oil Millers’ Association (SPPOMA) estimated production during Jan. 1-10 declined 32% from the same period in December, traders said on Tuesday.

Dalian’s most-active soyoil contract fell 0.4%, while its palm oil contract slipped 0.1%. Soyoil prices on the Chicago Board of Trade were down 0.1%, after jumping 1.5% overnight.

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