Malaysian palm oil futures fell 7% for the week even as the contract firmed on strength in rival soyabean oils, as panic over the coronavirus outbreak drove heavy selling across assets. The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed up 1 ringgit, or 0.04%, to 2,278 ringgit ($532.87).
Markets are worried that the epidemic will suppress palm oil consumption and crude oil prices, said Oscar Tjakra, senior analyst at Rabobank's RaboResearch Food & Agribusiness. Weak crude oil futures lessen palm's appeal as biodiesel feedstock.
Brent crude and world stock markets was set for their biggest weekly drop since the 2008 financial crisis, as virus-driven panic selling has hit almost every asset class. Palm oil fell to levels last seen in October as demand concerns outweighed a drop in February stockpiles and a pick up in exports ahead of the Muslim holy month of Ramadan.
"With social distancing, food service industry demand for palm oil will be negatively affected. Global recession will also reduce consumption when people eat out less," Tjakra added.
Dalian's most-active soyaoil contract fell 0.26%, while its palm oil contract slipped 1.06%. Soyaoil prices on the Chicago Board of Trade gained 1.33%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.