KUALA LUMPUR: Malaysian palm oil futures closed at their lowest in nearly a month on Thursday, hit by weakness in rival oils and expectations of higher supply as the peak production season begins.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange fell 154 ringgit, or 3.72%, to 3,990 ringgit ($890.82) a tonne, its lowest since Aug. 5.
The market is under pressure from weakness in commodity markets and expectations of strong production, which could offset exports and push inventories above 2 million tonnes, a Kuala Lumpur-based trader said.
Exports of Malaysian palm oil products for August fell 3% from July, cargo surveyor AmSpec Agri Malaysia said.
Two other firms, Intertek Testing Services and Societe Generale de Surveillance, said exports rose between 0.3% and 1.6%, slowing from the pace seen earlier in the month.
In top producer Indonesia, a lower threshold for export levies will come into effect on Nov. 1, marking an end to several months in which the country waived the tariffs to encourage shipments amid a glut in domestic stock.
Indonesia also set its crude palm oil reference price at $929.66 per tonne for the Sept. 1-15 period, putting the export tax lower than previously expected at $74 per tonne.
In key buyer China, southwestern Chinese metropolis of Chengdu announced a lockdown of its 21.2 million residents as it launched four days of citywide COVID-19 testing, which may hurt consumption of the vegetable oil.
Dalian’s most-active soyoil contract fell 3.2%, while its palm oil contract lost 3.3%. Soyoil prices on the Chicago Board of Trade were down 2.7%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.