Palm oil falls as virus death toll fuels selling pressure

• The benchmark palm oil contract, for April delivery, on the Bursa Malaysia Derivatives Exchange was down 42 ringgit.
• Malaysia held its export tax for crude palm oil unchanged at 6pc for March, the Malaysian Palm Oil.
• Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

KUALA LUMPUR: Malaysian palm oil futures slid on Thursday, as a surge in the coronavirus death toll in China dashed hopes that the outbreak in the second-largest buyer of the vegetable oil would ease.

The benchmark palm oil contract, for April delivery, on the Bursa Malaysia Derivatives Exchange was down 42 ringgit, or 1.55pc, at 2,667 ringgit ($644.51) per tonne during the midday break.

The new death tally came a day after China had reported its lowest number of new coronavirus cases in two weeks, bolstering a forecast by Beijing's senior medical adviser for the outbreak there to end by April.

In the previous session, palm oil snapped a three-day losing streak to edge up 0.52pc on reports that the number of new infections had slowed, a Kuala Lumpur-based trader said.

However, latest reports of new methods of detecting the virus infections dragged prices in soybean oil and Dalian lower, prompting selling pressure in Malaysian palm oil, he said.

The death toll in China's Hubei province from the coronavirus outbreak leapt by a record 242 on Thursday to 1,310, with a sharp rise in confirmed cases after the adoption of new methodology for diagnosis, health officials said.

"If the virus infections escalate further, more selling pressure will emerge," the trader added.

Demand worries have also weighed on the market this week, as

Feb. 1-10 exports saw a 20pc-29.4pc drop on lower purchases from top buyers India and China, according to cargo surveyors.

Traders are expecting exports to remain subdued in February, as the virus outbreak in China turned bustling cities into ghost towns and India import less following a restriction on refined palm oil and palmolein.

Malaysia held its export tax for crude palm oil unchanged at 6pc for March, the Malaysian Palm Oil Board said on Thursday.

Dalian's most-active soyoil contract and its palm oil contract were both down 1.3pc.

Soyoil prices on the Chicago Board of Trade fell 0.8pc.

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