The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange closed 79 ringgit, or 1.8% lower, to 4,254 ringgit ($1,023.83) a tonne
Indonesian authorities have been weighing up for months whether to cut the crude palm oil export levy, which has been at its highest level for five months in a row, hurting demand.
The tariff for export levy begins when prices are at $750 per tonne, with a $20 increase for every $50 rise in CPO.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 2.7% to close at 3,917 ringgit ($946.59). It erased some of the 3.4% gain posted on Tuesday.
The Bursa Malaysia was closed on Wednesday for the Vesak Day holiday.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed down 157 ringgit, or 3.52%, at 4,300 ringgit ($1,039.65) a tonne, its biggest one-day percentage fall in seven weeks.