Palm oil reverses gains as pandemic fears shake market

• The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed to trade down 17 ringgit, or 0.7%, to 2,421 ringgit ($571.66) a tonne.

KUALA LUMPUR: Malaysian palm oil futures erased early gains and ended lower on Wednesday, rattled by weakness in global markets as coronavirus cases spiked outside China and sparked fears of a pandemic.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed to trade down 17 ringgit, or 0.7%, to 2,421 ringgit ($571.66) a tonne.

Palm oil gained as much as 1.07% during early trade, but have lost almost 8% so far this week.

"Soybean oil prices are dropping and there are no major announcements," said a Kuala Lumpur based trader.

Dalian's most-active soyoil contract inched down 0.31%, while its palm oil contract fell 1.3%. Soyoil prices on the Chicago Board of Trade were down 0.5%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

The ringgit, palm's currency of trade, gained 0.2% against the dollar, making the edible oil more expensive for holders of foreign currency.

The coronavirus outbreak has kept the market on edge following sharp increases in infections outside China, including South Korea, Italy, Iran and the Middle East.

The outbreak has dampened exports to China, the second largest palm buyer, with Malaysia's Feb. 1-25 exports falling between 3% and 5%, according to cargo surveyors on Tuesday.

Elsewhere, Asian shares fell as a U.S. warning to Americans to prepare for the possibility of a coronavirus pandemic jolted Wall Street yet again and pushed yields on safe-haven treasuries to record lows.