KUALA LUMPUR: Malaysian palm oil futures slipped on Monday, hurt by a slump in crude prices after China announced a nine-day lockdown in Shanghai to carry out COVID-19 testing, while weaker March exports also weighed on sentiment.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 37 ringgit, or 0.61%, to 5,990 ringgit ($1,422.80) a tonne by the midday break, down for a second session in three.

Shanghai, financial hub of key market China, launched a two-stage lockdown of its 26 million people, closing bridges and tunnels, and restricting highway traffic in a scramble to contain surging COVID-19 cases. Oil prices dropped about $4 as concerns over slower fuel demand in China grew, making palm a less attractive option for biodiesel feedstock. Palm oil tumbles as crude prices fall

A tight supply of soybeans due to the drought season in South America, as well as supply bottlenecks for sunflower oil in the Black Sea region, will support palm oil prices but high commodity prices is quickly eroding the purchasing powers of consumers globally, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

Exports of Malaysian palm oil products for Mar. 1-25 fell 5% to 1,030,943 tonnes from the same week in February, cargo surveyor Societe Generale de Surveillance said on Sunday.

The Malaysian Palm Oil Council (MPOC) forecast a small rise in 2022 global palm oil production, with Malaysia’s output seen at 18.9 million tonnes and Indonesia’s at 47.1 million tonnes.

The Malaysian Palm Oil Board (MPOB) revised upwards its outlook for 2022 crude palm oil price to an average of 4,250 ringgit ($1,008.78) a tonne.

In related oils, Dalian’s most-active soyoil contract rose 0.9%, while its palm oil contract gained 1.3%. Soyoil prices on the Chicago Board of Trade were down 1.2%.