Malaysian crude palm oil futures closed 3.5 percent lower on Monday, with the benchmark contract likely to drop further to test 1,550 ringgit this week due to weak exports, dealers said.
Benchmark August crude palm oil on the Malaysia Derivatives Exchange settled 59 ringgit down at 1,615 ringgit ($425) a tonne.
It had dived as much as 62 ringgit earlier, crossing the halfway mark for the limit down in a day.
The fall also shattered the contract's earlier support of 1,630 ringgit, setting the bar immediately at 1,600. A steady drop in palm oil exports since April have seen prices dropping from the 1,800-1,900 ringgit of earlier months.
ITS had estimated exports for April 1-25 at 834,578 tonnes.
It was only expected to put between 750,000 and 765,000 for May 1-25, dealers said.
"That's an 80,000-tonne drop, that's serious," said a trader.
SGS, whose figures are more closely watched by the market, has estimated April 1-25 exports at 849,816 tonnes.
It had given 592,272 tonnes fort May 1-20, compared with the 849,816 tonnes it had given for April 1-20.
Worry that top palm oil buyer India soon may cut the base price for import duties of rival soyaoil also weighed on prices, dealers said. Industry officials in India told Reuters last week that the price of crude soyaoil before import tax has fallen to around $600 a tonne, below the $710 base India uses to calculate its 45 percent duty.
An adjustment would cut the landed cost of soyaoil in India and make it more competitive to palm oil, the officials said.
"Last year around this time, we were enjoying a discount of $100 a tonne to soyaoil because our prices were lower," said a palm oil exporter in Kuala Lumpur. "Now, the discount is only $65 and God knows what it'll be if India changes the soyaoil duty."
A higher close in Chicago soyaoil on Friday did little to boost confidence in palm oil. July soyaoil on the Chicago Board of Trade ended 0.40 cent a lb up at 29.05 cents.
Physical palm oil prices in Kuala Lumpur were also down sharply at Monday's close.
May crude palm oil saw buyers/sellers at 1,760/1,770 ringgit a tonne in the southern and central regions, compared with Friday's quotes of 1,800/1,810.
Trades were reported at 1,785-1,760 ringgit at the close.
June CPO also saw bids/offers at 1,760/1,770 ringgit. Trades closed at 1,780-1,760 in the south and 1,780-1,770 in the central region.
PALM OIL FUTURES:
May (south): 1770.
Open/High/Low: 1675/1677/1612.
Previous close: 1810.
PALM OIL PHYSICALS:
August (3rd month): 1615.
Previous settlement: 1674.
FUTURES: Benchmark third-month August down 59 ringgit at 1,615 ringgit ($425) a tonne.
PHYSICALS: Down, following futures.