Singapore -- Malaysian crude palm oil futures plunged to 25-month lows Thursday, on a glut in inventories amid dwindling demand, especially from China, data from the Malaysian Palm Oil Board showed Friday.

CPO futures ended Thursday at MR2,620/mt ($856.52/mt), down MR47.5/mt from MR2,667.50/mt on Wednesday. The last time it was lower was on July 29, 2010 when it reached MR2,587/mt.

CPO prices in Malaysia have seen steady declines since April this year due to lower demand for vegetable oils, especially from China.
Malaysia's CPO exports to China over January-August this year fell 19.14% year on year to 2.06 million mt from 2.55 million mt exported over the same period of 2011, MPOB data showed.

Malaysia's CPO stocks in August rose 18.77% to 1.19 million mt from around 1.02 million mt in August 2011. The stocks were up 15.13% from January's 1.037 million mt, the data showed.

Production for August was at 1.66 million mt, unchanged from August last year, reflecting lower consumption year on year. Output was, however, up 35.4% from 1.23 million mt produced in January 2012, the data showed.

Officials at MPOB did not comment on reasons behind higher inventory levels.

But one Singapore-based market source said the high stocks were likely due to an overall bearish sentiment which has led to China buyers holding back on purchases amid weak downstream demand in the food industry.

"The sentiment is quite bearish, and buyers are just staying on the sidelines now," another source at a biodiesel producer said.