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[KUALA LUMPUR] Malaysian palm oil futures fell on Wednesday, tracking lower rival oils and as weaker exports weighed on market sentiment despite expectations of improved demand from India.
Benchmark palm oil futures for December on the Bursa Malaysia Derivatives Exchange fell 2.2 per cent to RM2,605 (S$856.89) a tonne at the close of trade, after hitting an intraday low of RM2,596, their weakest since Sept. 19.
Palm also saw its sharpest daily decline in six weeks, falling for a second straight session on Wednesday.
Traded volumes stood at 72,903 lots of 25 tonnes each in the evening, higher than the 2015 daily average of 44,600.
Palm prices are affected by soybean oil, which competes with it for a share in the global vegetable oils market.
The soybean oil December contract on the Chicago Board of Trade was down 1.5 per cent, while the January soybean oil contract on the Dalian Commodity Exchange dropped 1.2 per cent.
On Friday, India said it would cut import taxes on crude palm oil and refined vegetable oils by five per centage points to 7.5 per cent and 15 per cent, respectively, a move that traders say could spur demand for palm oil.
But palm oil shipments for the September 1-25 period have fallen nearly 16 per cent from the corresponding period in August, according to cargo surveyor data.
"The concern for exports is still there, the market is waiting for fresh demand," said a trader from Kuala Lumpur.
"India's reduction in duty should spur demand, but it's not there yet."
"The decline in soyoil prices and expectations of lower exports are weighing down on prices," said another trader.
Palm exports could slow towards the end of the year however on weaker demand from top consumers China and India, as colder temperatures in the northern hemisphere solidifies the tropical oil, making it less appealing to buyers.