The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 285 ringgit, or 7.8%, to 3,378 ringgit ($821.30) a tonne, its lowest since Feb. 5.
The futures contract was set for a 14.4% rise for the week, its biggest since 2001.
Palm oil is being supported by a rally in the global agricultural market led by Chicago corn and soybean futures, which are trading at multi-year highs.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed higher 74 ringgit, or 2.03%, to 3,724 ringgit ($900.82) a tonne, after falling 3% in the previous session.
"We expect total supply to outstrip total demand leading to higher ending stocks of 1.53 million tonnes," he added.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange rose 51 ringgit, or 1.36%, to 3,790 ringgit ($917.23) a tonne by the midday break.
The recent rally in futures also supported the cash market prices to balloon and keep crude palm oil import margins in positive territory.