KUALA LUMPUR: Malaysian palm oil futures closed lower on Thursday, as traders awaited clarity on Indonesia’s export ban, while weaker crude futures and concerns over slowing consumption in key market China weighed on sentiment.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange slid 134 ringgit, or 2.07%, to 6,342 ringgit ($1,443.99) a tonne, down for a second time in three sessions.

The market is seeking clarity on when Indonesia will lift its ban on shipments of palm oil, as well as a proposal by Malaysia’s commodities ministry on lower export taxes, said Anilkumar Bagani, research head of vegetable oils broker Sunvin Group.

Mohsin Mohammad, director at Selangor-based cooking oil exporter Sarafiah Natural Resources said Indonesia might reopen exports soon, which will lead to higher supply especially when the production peak months are nearing.

Palm hits two-week low on higher April stockpile

A prolonged lockdown to contain the COVID-19 outbreak in China will hurt demand in the the world’s second largest palm importer, he added.

Buyers in China are “no longer big bulls” in the commodities markets as they face an economic slowdown while the country chases a zero-COVID policy, edible oil analyst Dorab Mistry said on Wednesday.

Exports of Malaysian palm oil products for May 1-10 rose 45.2% from the same week in April amid Indonesia’s ban on shipments, data from cargo surveyor Societe Generale de Surveillance showed on Wednesday.

Production during the period, however, is expected to ease due to shorter working days in the month after Eid al-Fitr holidays, traders and analysts said.

Dalian’s most-active soyoil contract rose 0.3%, while its palm oil contract fell 0.8% higher. Soyoil prices on the Chicago Board of Trade were down 1.3%.

Oil prices dropped more than 1% in a volatile week as economic concerns and recession fears dogged global financial markets, making palm a less attractive option for biodiesel feedstock.