Palm oil hits 39-month low

Malaysian palm oil futures fell for a third day on Tuesday as a change in export levies by the world's top exporter Indonesia and weak demand weighed on the market. Palm oil extended Monday's 3.5 percent drop, the sharpest since Feb. 16 last year, after Indonesia said it would temporarily remove an export levy to reduce the impact of a sharp drop in prices on the country's farmers.
This could make Indonesian palm oil more competitive against Malaysia's, traders said. Meanwhile, the palm oil refiner group in Indonesia said the move will do little to help increase palm prices as it removes incentives for local refiners.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange closed at 1,966 ringgit ($469.44) per tonne on Tuesday, down 0.3 percent. Earlier in the session, it hit its lowest since August 2015 at 1,940 ringgit per tonne.
Traded volumes stood at 46,849 lots of 25 tonnes each. Demand for the vegetable oil remains sluggish, a trader in Kuala Lumpur said, keeping prices depressed. Shipments of Malaysian palm oil products for Nov. 1-25 fell 1 percent from the same period a month earlier, cargo surveyor Societe Generale de Surveillance said on Tuesday.
Palm oil prices have dropped to a level close to production costs for some plantations, the trader said, adding that this might prevent some producers from selling their products. "It is not a bullish factor, but at least it will limit some of the selling, providing some support to palm," the trader said.
In other related oils, the Chicago soyabean oil contract for December was up 0.14 percent, while the January soyabean oil contract on the Dalian Commodity Exchange was down 0.7 percent. Soyabean prices are being weighed down by fears of a prolonged trade war between the United States and China, the world's biggest importer of the oilseed.
Meanwhile, the Dalian January palm oil contract was traded 1.7 percent lower. Palm oil prices are affected by movements of other edible oils as they compete for a share in the global vegetable oils market. Meanwhile, crude oil prices fell on Tuesday as oil production by Saudi Arabia hit an all-time high in November.