Palm oil prices are impacted by movements in crude oil, as the edible oil is used as feedstock to make biodiesel.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange fell 0.2 percent to 2,258 ringgit ($546.60) a tonne.
Trading volumes stood at 11,683 lots of 25 tonnes each at the midday break. <1FCPO-TOT>
"The market is reacting towards lower crude prices today,"
said a Kuala Lumpur-based futures trader, adding that the market could, however, hold at current levels as palm oil export data so far showed rising demand.
Malaysian palm oil shipments during Jan. 1-20 rose in the range of 9-13 percent from a month earlier, according to cargo surveyors Intertek Testing Services, AmSpec Agri Malaysia and Societe Generale de Surveillance.
Another trader added that palm prices were also down on profit taking activities after the previous session's high, but that the decline could be temporary if production figures show declines in line with seasonal trend.
Crude oil had fallen about 2 percent on Tuesday over concerns that a slowing global economy could slow fuel demand as U.S. shale fields surge and cuts by Russia come in below expectations.
Oil prices, however, held steady on Wednesday on hopes that increased Chinese spending would stem an economic slowdown that is showing signs of spreading and has been weighing on financial markets.
In related oils, the Chicago March soybean oil contract rose 0.3 percent on Wednesday, while the May soybean oil contract on the Dalian Commodity Exchange was slightly down 0.1 percent.
Meanwhile, the Dalian January palm oil contract gained 0.1 percent.
Palm oil prices are impacted by movements in soyoil rates, as they compete for a share in the global vegetable oil market.