KUALA LUMPUR: Malaysian palm oil futures slid over 2% on Wednesday, hitting their lowest in more than two months, as trader braced for lower shipments after top producer Indonesia lowered its export fees.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 134 ringgit, or 2.29%, to 5,714 ringgit ($1,293.20) a tonne by the midday break.
Palm has fallen in five sessions out of six, touching its lowest since April 5.
The contract continued its bearish momentum following a sell-off in Chicago soyoil and weak crude oil prices, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Palm oil may drop to 5,702 ringgit
Indonesia’s reduction in net payable export taxes also put pressure on Malaysian palm oil, he added.
The country issued on Tuesday new regulations on palm oil export taxes, detailing the recently announced levy rate cut to accelerate shipments that have been slow to rebound after the ending of an export ban.
Dalian’s most-active soyoil contract fell 0.9%, while its palm oil contract lost 1.6%. Soyoil prices on the Chicago Board of Trade were down 0.3%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices rebounded from losses earlier in the session, amid concerns over fuel demand and the broader economy ahead of an expected big interest rate hike by the US Federal Reserve.
Weak crude futures make palm a less attractive option for biodiesel feedstock.
Palm oil looks neutral in a range of 5,702-5,892 ringgit per tonne, and an escape could suggest a direction, Reuters technical analyst Wang Tao said.
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