The Malaysian palm oil futures on Wednesday (Sept 28) 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 RM3,225 (US$696.85) per tonne.
Palm hit an intraday low of RM3,220, the lowest since Feb 3, 2021. It lost 17% over five days.
As prices broke below the RM3,430 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.
Oil prices fell more 1%, pressured by a strengthening dollar and crude storage builds that offset support from US 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 US$792.19 per tonne for Oct 1-15, a government official said, which would place its export tax at US$33 per tonne, down from currently US$52 per tonne.
(US$1 = RM4.6280)
Source: Reuters