Palm hits two-week low on worries over demand, lockdown

KUALA LUMPUR: Malaysian palm oil futures fell to a two-week low on Friday, and were on course for a 9% weekly drop, hit by demand and lockdown concerns and tracking a sell-off in rival edible oils.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 25 ringgit, or 0.61%, to 4,087 ringgit ($987.68) a tonne by the midday break.

Palm fell for a third straight session and looked set to post its biggest weekly decline in two months.

Malaysia's palm exports during May 1-20 rose 16% month-on-month, according to data from Amspec Agri, but traders are worried that the pace of exports would decline due to reduced purchases by key buyers.

There are also concerns of stricter movement restrictions in Malaysia, which could implode consumption from the domestic hospitality, restaurants and catering sectors, a Kuala Lumpur-based broker said.

The world's second-largest palm oil producer on Thursday reported 6,806 new coronavirus cases, its second straight day of record infections, amid local reports that the government was discussing a full lockdown to curb the outbreak.

Dalian's most-active soyoil contract fell 1.9%, while its palm oil contract was down 2.2%. Soyoil prices on the Chicago Board of Trade slid 0.4%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Palm oil may fall more into a range of 3,955-4,021 ringgit per tonne, as suggested by the current strong momentum, Reuters technical analyst Wang Tao said.