Malaysian palm oil futures ended 6 percent lower on Friday, marking the biggest weekly drop in over a decade, as coronavirus cases continued to spread globally and stoked worries about a slump in global edible oil demand. The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed to trade down 137 ringgit, or 5.57% to 2,322 ringgit ($548.29), its lowest since Oct. 23, 2019.
Palm oil prices declined 11.44% for the week, the sharpest weekly fall since October 2008. It has also fallen 10.8% for the month, the second straight monthly drop. "Palm oil is under pressure from the unprecedented fall in crude and gas oil prices along with sharply lower related Dalian palm olein and CBOT soya oil futures," said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
Coronavirus panic dragged oil prices to its lowest in more than a year and sent world share markets crashing on Friday, compounding their worst week since the 2008 global financial crisis and dragged oil prices to its lowest in more than a year on Friday. Hopes the virus would be contained to China vanished on Friday as infections spread rapidly around the world, countries started stockpiling medical equipment and investors took flight in expectation of a global recession.
Meanwhile, Dalian's most-active soyaoil contract traded 3.94% lower, while its palm oil contract fell 4.99%. Soyaoil prices on the Chicago Board of Trade were down 2.16%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The combination of lower demand and a market expectation of much higher production levels have also pressured the contract, Marcello Cultrera, institutional sales manager at Phillip Futures in Kuala Lumpur said. "Sentiments are bearish amid global macroeconomic issues hampered by coronavirus outbreak in and outside of China," Bagani said.
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