Business Recorder (17/03/2020) - Malaysian palm oil futures closed more than 2% lower on Monday as the rapid spread of the coronavirus globally raised concerns over lower demand.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange ended down 49 ringgit, or 2.16%, to 2,221 ringgit ($516.15).
Palm dropped 7% last week around levels last seen in October as panic over the pandemic drove heavy selling across assets.
“Palm is down on demand disruption in the European Union and Middle East as rising coronavirus cases in the region is risking vegetable oil demand," said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.
Malaysian palm oil exports for March 1-15 fell between 1.8% and 9.6% from the month before, according to cargo surveyors.
The contract was also hit by spillover weakness in crude oil futures and prospects of improving production, said Marcello Cultrera, institutional sales manager at Phillip Futures in Kuala Lumpur.
“Though prices finally seem to be stabilising, which is encouraging for buyers," Cultrera added.
US crude fell below $30 on Monday as emergency rate cuts by the US Federal Reserve and its global counterparts failed to soothe markets amid the outbreak. Weak crude oil futures make palm a less attractive option for biodiesel feedstock.
Malaysia has decreased its export duty for crude palm oil to 5% for April from 6% in March, the Malaysian Palm Oil Board said on Monday.
Malaysia's tax cut will put pressure on Indonesian palm oil, as the world's largest palm producer will lose competitiveness against Malaysia if they do not lower palm oil export levies, said Bagani.
Dalian's most-active soyaoil contract gained 0.92%, and its palm oil contract fell 0.09%. Soyaoil prices on the Chicago Board of Trade were trading down 1.78%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Read more at https://www.brecorder.com/2020/03/17/580598/palm-oil-ends-over-2pc-lower/