Malaysian palm oil futures extended a downward trend, closing 0.3 percent lower on Monday as weak demand weighed on prices. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange hit a low of 2,345 ringgit ($588) before recovering to close at 2,358 ringgit ($592) by the end of trade, the lowest since May 7.
Trading volumes were thin at 25,645 lots of 25 tonnes each. David Ng, a palm trader at Phillip Futures, said "lacklustre demand" was primarily to blame. "The imposition of export tax at 5 percent could dampen some demand going forward," he added.
The Malaysian government reinstated export tax last month after a three-month hiatus. Demand for palm oil showed further signs of weakness on Monday, as Malaysia's exports between June 1 and 10 stood at 324,947 tonnes, down 20 percent from the same period a month earlier.
In other related oils, the July soyabean oil contract on the Chicago Board of Trade dropped 0.3 percent, while the September soyabean oil contract on the Dalian Commodity Exchange fell 0.6 percent. Palm oil prices track the performances of other edible oils, as they compete for a share in the global vegetable oils market.
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