KUALA LUMPUR: Palm oil futures in Malaysia on Friday logged a second consecutive weekly loss and fell to their lowest levels in three weeks, dented by a stronger ringgit and tepid demand.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange slid 69 ringgit, or 1.76%, to 3,842 ringgit ($886.48) a tonne.

For the week, the contract lost 5.2%.

There are concerns about demand for Malaysian palm oil from biggest buyers India and China after early-January exports plunged by about half, as buying is slow because the destination markets are stocked up on the edible oil, traders said.

Malaysia said on Thursday it could stop exporting palm oil to the EU in response to a new law aimed at protecting forests by strictly regulating sale of the product.

Palm oil hovers near three-week lows on slow exports

The idea mooted by Malaysia is a bearish signal when traditional export destinations are already reducing demand due to price parity and stiff competition from Indonesia, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

A move by top palm oil exporter Indonesia to restrict shipments and boost domestic biodiesel consumption is set to squeeze global vegetable oil supplies already undercut by lower output in Southeast Asia and Latin America.

The ringgit, palm’s currency of trade, rose 0.53% against the dollar, making the commodity more expensive for buyers holding other currency.

Dalian’s most-active soyoil contract dipped 0.02% while its palm oil contract fell 0.5%. Soyoil prices on the Chicago Board of Trade slipped 0.3%.