Malaysian palm oil futures saw their sharpest decline in a week at the close of trade on Monday evening, on the back of weaker export demand and a fall in crude oil prices. The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 1.2 percent at 2,307 ringgit ($577.33) per tonne at the end of the trading day. It had gained 0.7 percent in the previous session following eight consecutive days of falls.
Trading volumes stood at 62,352 lots of 25 tonnes each on Monday evening. "The weakness in energy prices is keeping palm prices from going up," said a Kuala Lumpur-based trader.
Palm oil prices are impacted by movements in the energy market, as it is used as feedstock to make biodiesel. Oil prices fell on Monday after China threatened duties on American crude imports and ahead of an Opec meeting, though US Brent crude recovered its losses to gain later in the day. Another palm oil trader added that weaker exports and forecasts of higher production in Malaysia were additional factors weighing on the market.
"Despite India's hike in soft oils duty on Thursday, it did not manage to turn the market around," she said. India last week raised import taxes on crude and refined soyaoil, sunflower oil and canola oil to the highest level in over a decade in a bid to support local farmers. The hike is expected to increase palm oil demand in the coming months by making it more competitive in the Indian market.
Malaysian shipments of the edible oil in the first half of June declined 7.2 percent versus the corresponding period in May, inspection company AmSpec Agri Malaysia said on Monday. Cargo surveyor Societe Generale de Surveillance reported on Monday evening that Malaysian palm oil exports declined 9.6 percent in the same duration.
In other related oils, the Chicaago July soyabean oil contrac was down 0.2 percent, while markets in China are closed for a national holiday on Monday.
Palm oil prices track the performance of other edible oils, as they compete for a share in the global vegetable oils market. Palm oil may revisit its June 13 low of 2,300 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.