KUALA LUMPUR: Malaysian palm oil futures plunged on Wednesday, closing at the lowest in six months, as the market tracked deep losses in crude and rival edible oils amid top producer Indonesia’s push for higher exports.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange tumbled 482 ringgit, or 9.68%, to 4,498 ringgit ($1,021.58) a tonne, its sharpest daily loss since January 2020.

Indonesia has issued export permits for 894,481 tonnes of palm oil products under its Domestic Market Obligation (DMO) scheme, a trade ministry official said.

The market is down on continued weakness in Chicago soybean oil, Dalian edible oils and crude oil, a Kuala Lumpur-based trader said.

“But declining open interest indicates some short covering have been taking place in the last 2-3 trading days,” he added.

Palm oil may bounce into 5,086-5,204 ringgit range

Dalian’s most-active soyoil contract fell 5.1%, while its palm oil contract slipped 3.8%.

Soyoil prices on the Chicago Board of Trade were down 3.8% following forecasts of favourable weather in the US Midwest.

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

Malaysia’s Prime Minister said the government will lift the subsidies for bottled cooking oil products from July 1, but will continue subsidising 600,000 tonnes of cooking oil a month in the form of 1 kilogram packets.

The world’s second largest producer will on Wednesday receive the first group of around 40 Indonesian migrant workers since reopening its borders, Indonesia’s ambassador to Malaysia told Reuters, with the hopes of easing a major labour shortage in plantations.

Oil prices tumbled by around $5 amid a push by US President Joe Biden to cut taxes on fuel to cut costs for drivers, making palm a less attractive option for biodiesel feedstock.