Malaysian palm oil futures slid on Tuesday, as demand from second largest buyer China fell due to the coronavirus outbreak, while forecasts of higher February output further pressured prices.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed to trade down 7 ringgit, or 0.26%, at 2,642 ringgit ($636.32) a tonne.
February 1-15 production in the south of Malaysia is expected to increase by 42.52%, traders said, citing data from the Malaysian Southern Peninsular Palm Oil Millers Association.
Meanwhile, the number of new infections in China fell below 2,000 on Tuesday for the first time since January, although global experts warn it is still too early to say the virus outbreak has been contained. "The coronavirus outbreak in China is showing some signs of easing down but still things are not normal. The market is waiting for further confirmation that it is under control," said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.
Palm oil futures lost 5.4% last week on lower purchases from top buyers India and China. India, the world's top palm oil buyer, in January imposed restrictions on imports of refined palm oil from Malaysia, while the coronavirus outbreak in China has hurt demand for the commodity.
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