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Palm oil drops with other vegetable oils on slowing demand
[KUALA LUMPUR] Malaysian palm oil futures on Wednesday suffered their steepest drop in two weeks, tracking declines in rival vegetable oils and feeling the pressure of slowing demand, while traders booked profits.
The palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange lost 0.8 per cent to reach 2,590 ringgit (S$863.58) per tonne by the midday break.
The price was 1.6 per cent lower than the one-month high of 2,632 ringgit (S$877.59) hit on Monday, while the drop was the biggest since a 1.8 per cent slump on March 2.
Trade volumes were 21,493 lots of 25 tonnes each in the morning session.
"The market is coming down on the weak performance of Dalian, and soyoil is also weakening," a Kuala Lumpur-based trader said. "The market is taking the opportunity to do some profit-taking activity." Among other vegetable oils, May soybean oil on the Dalian Commodity Exchange was off 0.2 per cent, while the Chicago soyoil contract shed 0.4 per cent.
Palm oil prices were also weighed down by weak export demand, as consumption from top buyers China and India wane due to slowing economic growth.
Exports of Malaysian palm oil products for Mar 1-15 fell 1.1 per cent compared with Feb 1-15, recent data from cargo surveyor Societe Generale de Surveillance showed.
Data from Intertek Testing Services recorded a 10.5 per cent jump in shipments for the same time period, but traders say this was off low volumes in February when activity slowed due to the Chinese lunar new year.
Trading activity however is expected to pick up this month before a 5 per cent export tax on crude palm oil kicks in during April.