Malaysian palm oil futures fell more than 3% on Wednesday following news of a U.S. plan to implement a smaller biofuel mandate than it had initially proposed.

The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange slid 136 ringgit, or 3.65%, to 3,591 ringgit ($772.76) per metric tonne by the midday break, extending losses for a second session.

The Biden administration plans to increase the amount of biofuel that oil refiners must blend into the nation's fuel mix over the next three years, but the plan includes lower mandates for corn-based ethanol than it had initially proposed, two sources familiar with the matter told Reuters.

"The market seems much more cautious than it was in previous days. There are plenty of offers everywhere but buyers don't seem to be all that interested," said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

This is partly because the market rallied suddenly last week, but the fundamentals did not change all that much, he added.

Exports of Malaysian palm oil products for June 1-20 fell 16.8% from May, cargo surveyor Intertek Testing Services said. Another cargo surveyor, AmSpec Agri Malaysia, said exports fell 12.9%.

Dalian's most-active soyoil contract DBYcv1 fell 2.96%, while its palm oil contract DCPcv1 dropped 3.5%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 5.9%.