KUALA LUMPUR: Asian vegetable oil markets fell on Friday, with futures in China and Malaysia declining by 2-4 percent, hit by the effects of a sell-off on China's commodities market.
Malaysian palm oil futures tracked refined, bleached and deodorised (RBD) palm olein on the Dalian Commodity Exchange, falling the most in five months on Friday.
The most actively traded September contract for palm olein and the September soybean oil contract, both on the Dalian Commodity Exchange, fell 4 percent in Friday's late trade.
"It's all influenced by massive speculation -- we see high runs and sharp drops," observed a palm oil futures trader in Kuala Lumpur.
"What happened earlier with China's stock market is now shifting to commodities."
The palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was 2.3 percent lower at 2,587 ringgit ($642) a tonne at the close of trade. Traded lots stood at 56,153 lots of 25 tonnes each, versus a 2015 daily average of 44,600.
While this is the market's sharpest drop since it fell 3 percent on Dec. 15, palm still gained 0.8 percent this week for a second consecutive weekly gain.
"The market slid on Dalian's RBD (refined, bleached and deodorised) palm olein. Most of the commodity prices are down sharply in China, so our market tagged along with that," another Kuala Lumpur-based trader said.
Crude palm oil futures on the Multi Commodity Exchange of India for May were also dragged down, losing 1 percent.
China's Dalian Commodity Exchange said on Thursday that it will restore full transaction fees on soybean meal, corn starch, palm oil and soybean oil futures positions that are opened and closed on the same day, among other measures to curb speculative trading behind strong rallies last month.
The offer price for crude palm kernel oil stood at 4,844.64 ringgit a tonne in the evening, according to price assessments by Thomson Reuters.
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