KUALA LUMPUR: Malaysian palm oil futures fell more than 3% on Wednesday as traders braced for a further decline in June shipments after top producer Indonesia lowered its export fees, while weakness in rival oils also weighed on the market.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 195 ringgit, or 3.33%, to 5,653 ringgit ($1,281.28) a tonne.
Palm has fallen in five out of six sessions, closing at its lowest since April 1.
The contract continued its bearish momentum following a sell-off in Chicago soyoil and a drop in crude oil prices, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Indonesia’s move to reduce net payable export taxes also put pressure on Malaysian palm oil, he added.
The world’s top palm producer on Tuesday issued new regulations on export taxes, detailing the recently announced levy rate cut to accelerate palm shipments which have been slow to rebound after the ending of an export ban.
Exports from Malaysia during June 1-15 already declined between 3.5% and 6.1% from the same period in May, according to estimates by two cargo surveyors.
Another cargo surveyor, Intertek Testing Services said exports during the period rose 5.6%.
In related oils, Dalian’s most-active soyoil contract fell 1.6%, while its palm oil contract lost 2.9%. Soyoil prices on the Chicago Board of Trade were down 1.1%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices fell $1, making palm a less attractive option for biodiesel feedstock.