KUALA LUMPUR: Malaysian palm oil futures fell more than 1% on Tuesday, tracking a sharp drop in Dalian oil prices, while fears of new restrictions in Europe to contain a spike in Covid-19 cases also hit sentiment.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange closed down 51 ringgit, or 1.7%, at 2,956 ringgit ($715.39) a tonne, marking its second straight session of drop.
“Prices came down on global weakness in equity markets and possible lockdown in some European states,” a Kuala Lumpur-based trader said. “Expect further weakness if global rout continues.”
Long liquidation is heavy as prices jumped by 200 ringgit -250 ringgit ($48.38) in the last two weeks, the trader said.
Europe’s stock markets clawed back some ground, a day after rising second waves of the coronavirus pandemic caused the region’s biggest wipeout since June and drove investors back to government bonds.
Earlier in the day, palm prices fell nearly 3% before cutting some of those losses on strong export demand ahead of key festivals in China and India.
Exports of Malaysian palm oil products for Sept. 1-20 rose 17.6% to 1,047,269 tonnes from the month before, cargo surveyor Societe Generale de Surveillance said.
Shipments from Malaysia are expected to be steady until October, with arrivals to top buyer India likely to improve ahead of the Diwali festival there, according to Refinitiv Commodities Research.
Palm oil imports into the European Union and Britain in the 2020/21 season that started on July 1 totalled 1.41 million tonnes by Sept. 20, up from 1.32 million tonnes in the previous season, official EU data showed on Monday.
Dalian’s most-active soyaoil contract fell 3.08%, while its palm oil contract dropped 4.31%.
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