JAKARTA: Malaysian palm oil futures on Wednesday extended losses for a fifth straight day, and hit a near 20-month low during the session, as recession fears hurt demand in edible oils market.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 8.46% to close at 3,225 ringgit ($696.85) per tonne.

Palm hit an intraday low of 3,220 ringgit, the lowest since Feb. 3, 2021. It lost 17% over five days.

As prices broke below 3,430 ringgit level on Wednesday, traders “were aggravated to clear their long positions”, a trader in Kuala Lumpur said.

“Global turmoil in energy and share markets added to selling pressure in edible oils side.”

World shares sank to two-year lows, hammered by spiralling borrowing costs that intensified fears of a global recession and sent investors into the arms of the safe-haven dollar.

Palm pares some losses, bearish price outlook weighs

Oil prices fell more 1%, pressured by a strengthening dollar and crude storage builds that offset support from U.S. production cuts caused by Hurricane Ian.

Dalian’s most-active soyoil contract fell 0.36%, while its palm oil contract dropped 2.76%. Soyoil prices on the Chicago Board of Trade declined 1.57%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market, while weaker crude oil makes palm oil less attractive as biofuel feedstock.

Exports of Malaysian palm oil products for Sept. 1-25 rose between 18.6% and 20.9% from a month-ago figures, cargo surveyors said.

Meanwhile, the world’s top palm oil producer Indonesia plans to set its crude palm oil reference price at $792.19 per tonne for Oct. 1-15, a government official said, which would place its export tax at $33 per tonne, down from currently $52 per tonne.