Palm oil falls 2pc as export pace slows, Indonesia taxes weigh

KUALA LUMPUR: Malaysian palm oil futures fell over 2% on Monday as the pace of exports slowed and Indonesia raised its export taxes for June, with a nationwide lockdown in Malaysia further dampening sentiment.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed down 91 ringgit, or 2.27%, at 3,919 ringgit ($950.75) a tonne, its second daily decline in three.

The contract had fallen to an intraday low of 3.4% after an Indonesian government official said the country would set its crude palm oil reference price higher in June at $1,223.9 a tonne.

This means Indonesia's export taxes for crude palm oil in June will be higher at $183 per tonne, while export levies for the edible oil will be unchanged at $255 per tonne.

The market also fell on weakness in soybean oil last Friday and further selling could be due to slowing exports, a Kuala Lumpur-based trader said.

Malaysian palm oil exports in May ticked up 1.6% from April to 1.42 million tonnes, slowing from a 37% monthly rise logged during May 1-10, according to data from cargo surveyors Amspec Agri.

Malaysia will commence a two-week nationwide lockdown starting Tuesday that will see the closure of non-essential businesses and services to control the pandemic.

Palm oil plantations will be allowed to operate, while the manufacturing sector is permitted to operate with reduced capacity.

"The palm market is supported by weak output, limited by localized adverse weather and less working days in May versus April," Refinitiv Agriculture Research said in a note.

Dalian's most-active soyoil contract fell 0.2%, while its palm oil contract declined 0.5%. The Chicago Board of Trade was closed for a public holiday.

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