KUALA LUMPUR: Malaysian palm oil futures fell on Thursday, retreating from previous session’s rally fuelled by top producer Indonesia’s decision to widen export curbs, as higher-than-expected February inventories weighed on the market.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed down 125 ringgit, or 1.77%, to 6,949 ringgit ($1,660.06) a tonne.

The contract dropped 4.44% at the opening bell, after surging 10% in the previous session.

Indonesia’s palm oil price should not be dictated by the external market, its trade minister said, backing his decision to expand export curbs for the vegetable oil at a time of surging global prices.

The world’s top producer of palm oil will require companies to sell 30% of their planned exports of crude palm oil and olein at home, up from 20% currently, further tightening already squeezed global supply.

Malaysia’s palm oil inventories at the end of February came in above market expectations, with stockpiles declining 2% to 1.52 million tonnes, versus a Reuters survey pegging an 11% fall.

Production dropped 9.26% to 1.14 million tonnes, while exports defied expectations to fall 5.32% to 1.1 million tonnes, according to Malaysian Palm Oil Board data.

Further supporting prices, exports from Malaysia during March 1-10 rose between 6% and 17% from the same week in February, data from cargo surveyors showed.

Tight edible oil stockpiles and blocked shipments from the Black Sea area are expected to keep prices near record highs for the coming months, but sticker shock is expected to curb global consumption in the latter half of 2022, industry analysts said on Wednesday.

In related oils, Dalian’s most-active soyoil contract fell 1.9%, while its palm oil contract rose 0.9%. Soyoil prices on the Chicago Board of Trade were up 1.2%.