KUALA LUMPUR: Malaysian palm oil futures slumped more than 4% to a two-week low on Thursday as rival soyaoil fell, while demand concerns weighed and record-high coronavirus infections in the country stoked fears of stricter lockdowns.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange ended down 193 ringgit, or 4.49%, at 4,109 ringgit ($991.43) a tonne, extending sharp losses for a second straight session.
“Lower soyabean oil close on the Chicago Board of Trade, sparked by broader market meltdown in energy, commodities and equities, weighed on palm,” said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
Lower production outlook for May lent some support, but fears of rising inflation from the United States to China could cap the gains, he added.
Exports of Malaysian palm oil products during May 1 to 20 rose 16% from the same period a month earlier, data from independent inspection company AmSpec Agri Malaysia showed.
However, traders are concerned that exports will slow due to reduced buying from key destination markets India, China and the European Union.
Malaysia on Thursday recorded 6,806 new coronavirus cases, its biggest daily jump in infections. Local media reported that the government is mulling to implement a “total lockdown” to contain the outbreak.
Crude palm oil price is expected to soften in the second half of 2021 as production increases, said Sime Darby Plantation, the world’s largest palm planter.
Dalian’s most-active soyaoil contract fell 1.7%, while its palm oil contract declined 1%. Soyaoil prices on the Chicago Board of Trade were down 0.2%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.