Malaysian palm oil futures tumbled 5% on Monday, snapping three straight sessions of gains on forecasts of higher April inventories and weaker crude and soyaoil markets.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed down 106 ringgit, or 5.08%, to 1,982 ringgit ($459.86) per tonne, touching its lowest since July 23.
Palm oil prices fell 13% last month due to a historic rout in crude oil and as coronavirus-led lockdowns around the globe curbed demand.
The market is expecting the end-April stockpile to grow by 9% amid higher production, traders and analysts said.
"The soyabean price in correlation to palm oil is impacting prices, while the market awaits April palm supply data versus flattish demand and recent lower domestic consumption," said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur. The soyabean market came under pressure due to renewed tensions between the United States and China after President Donald Trump threatened new tariffs on Beijing over the coronavirus outbreak.
Soyaoil prices on the Chicago Board of Trade (CBOT) were down 1.62%. The Dalian was closed for trading.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
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