KUALA LUMPUR: Malaysian palm oil futures closed lower for a second consecutive session on Thursday, as fears of US tariffs imposed on China and muted demand for palm sparked a sell-off in the vegetable oils market.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange slid 46 ringgit, or 0.96%, to 4,769 ringgit ($1,069.28) a metric ton at the close.

The contract declined 2.21% in the previous session. The sell-off in Chicago soyoil spilled over into the Dalian oils, which then contributed to a decline in Malaysian palm futures, said Paramalingam Supramaniam, director at Selangor-based brokerage firm Pelindung Bestari. “Speculations that the incoming Trump administration will impose a 40% tariff on China contributed to the sell-off in the vegetable oils market,” he said, adding that the tariffs could shift China’s purchase of US soybean and soyoil to Brazil and Argentina.

Dalian’s most active soyoil contract fell 1.41%, while its palm oil contract shed 3.94%. Soyoil prices on the Chicago Board of Trade were up 0.85%.

Palm oil tracks price movements of rival edible oils, as they compete for a share of the global vegetable oils market. “The demand for palm is also a significant concern in November and December as India has apparently already bought sufficient supplies and as a result, arrivals are expected to be abundant,” he said.

Oil prices climbed as geopolitical concerns over escalating tensions between Russia and Ukraine outweighed the impact of a bigger-than-expected increase in US crude inventories.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock. The ringgit, palm’s currency of trade, strengthened 0.2% against the dollar, making the commodity more expensive for buyers holding foreign currencies.

US soybean futures hit a two-week low on Wednesday and fell more than 3% on expectations of plentiful South American soy harvests this year along with uncertainty about demand for soy-based biodiesel fuel, analysts said.