Palm slumps to 3-week low as Sino-US trade dispute escalates

KUALA LUMPUR: Malaysian palm oil futures fell nearly 2 percent on Tuesday to a more than three-week low, as the Sino-US trade war intensified and weakness in related edible oils weighed on the market, said traders.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange was down 1.4 percent at 2,215 ringgit ($534.51) a tonne at noon. Earlier in the session, it declined 1.8 percent to 2,206 ringgit, the lowest since Aug. 27.

Trading volumes stood at 29,447 lots of 25 tonnes each at noon.

"The market is down on the US-China issue," said a Kuala Lumpur-based futures trader.

US President Donald Trump imposed 10 percent tariffs on about $200 billion worth of Chinese imports and warned that if China takes retaliatory action against US farmers or industries, "we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports."

China's commerce minister said that the United States' unilateralism and protectionism will impact both US and China's interests and hurt the global economy.

Weakness in related oils on China's Dalian Commodity Exchange also contributed to palm's weaker performance, said the trader.

Palm oil prices are impacted by movements of other edible oils, as they compete for a share in the global vegetable oils market.

The January soybean oil contract on the Dalian Commodity Exchange dropped 0.2 percent, and the Dalian January palm oil contract was 1.3 percent lower.

Meanwhile, the Chicago September soybean oil contract fell 0.3 percent.

Palm oil may fall to 2,197 ringgit as it has broken a support at 2,227 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.