Malaysian palm futures fell their hardest in three weeks on Wednesday, hit by fears of higher production and slowing demand from top destinations India and China, amid a fast-spreading coronavirus outbreak.
The benchmark contract for May delivery on the Bursa Malaysia Derivatives Exchange closed down 92 ringgit, or 3.5%, at 2,547 ringgit ($612.26), its sharpest daily drop since January 28 and the second straight falling session.
"Worry of higher production in February killed the market today," said Sathia Varqa, owner and co-founder of Singapore-based Palm Oil Analytics.
Palm oil has suffered as demand slowed this month, with businesses in China shut because of a coronavirus epidemic and India, the world's largest consumer of edible oils, importing less following curbs on refined palm oil.
Malaysia's palm oil exports between February 1 and 15 dropped 6.7% to 10% on the month, cargo surveyors said, representing a slight recovery from a drop of 20% to 29.4% drop over the period from February 1 to 10. "Overall demand for March is going to be very bad. India is not touching Malaysian palm oil and China is quiet," said a trader based in Kuala Lumpur. "The virus factor has also taken a toll on everything."
The number of virus deaths in mainland China passed 2,000 on Wednesday, though the number of new cases fell for a second straight day as authorities tightened containment measures in the worst-hit city of Wuhan in central Hubei province.
Elsewhere, Dalian's most-active soyaoil contract lost 0.7%, while its palm oil contract fell 1.9%. Soyaoil prices on the Chicago Board of Trade also traded 1.1% lower.