KUALA LUMPUR: Malaysian palm oil futures fell 5.5 percent on Friday to their lowest level in nine months, following losses in rival soyoil and on sluggish export demand.
Benchmark palm oil futures for September delivery on the Bursa Malaysia Derivatives Exchange were down 3.7 percent at 2,268 ringgit ($561.80) per tonne as of 0811 GMT, after falling as much as 5.6 percent earlier in the day to 2,223 ringgit, the lowest level since Oct. 9, 2015.
They have lost 3.9 percent so far this week, heading for their fifth straight weekly fall.
“Palm oil is catching up with soyoil. For the last two days U.S. soyoil has been correcting. Palm has to correct in the same proportion to remain competitive,” said a Kuala Lumpur-based trader.
Malaysian palm oil market was closed on Wednesday and Thursday for Eid celebrations.
“The sharp fall in the Chinese market has shattered confidence. Traders are closing their long positions,” said a dealer.
The September contract for soybean oil, a substitute for palm oil, on the Dalian Commodity Exchange fell 0.47 percent, while the most actively traded September contract for palm olein declined 1.64 percent.
China is the world’s second largest palm oil consuming country after India.
U.S. soyoil futures fell 3.7 percent in the previous two sessions.
Higher stockpiles in Malaysia could also dent palm oil prices, forecast a Reuters poll of eight traders, analysts and planters. The survey showed inventories likely rose 7.4 percent to 1.77 million tonnes in June, while exports slumped 6.4 percent from May.
Output is seen rising for a fourth consecutive month in line with seasonal trend to reach 1.51 million tonnes.
