KUALA LUMPUR- Malaysian palm oil futures fell as much as 5% on Thursday to hit a more than two-week low on fears of a deep cut in January exports, and as key market China committed to more imports from rival Indonesia.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange fell 162 ringgit, or 4.4%, to 3,530 ringgit ($875.06) a tonne, its lowest since Dec. 29.
Palm oil's biggest daily drop in eight months was mainly due to apprehensions of Malaysia's exports falling 40% during Jan. 1 to 15 on-month. Cargo surveyors are scheduled to release export data on Friday.
Prices were also hurt as a top Chinese diplomat said on Wednesday that China would import more Indonesian products and increase investment in Southeast Asia's largest economy, responding to Jakarta's request to remove barriers and help balance the trade between the two countries.
Dalian and Bursa palm prices are already suffering due to poor Chinese demand, as recent lockdowns in the world's second largest palm buyer are likely to lower consumption during the Chinese New Year and cut post-festival restocking, said Marcello Cultrera, institutional sales manager and broker at Kuala Lumpur-based Phillip Futures.
"Both India and China are in resting mode after buying heavily in November and December prior to higher export duties and levies coming in place," Cultrera said.
"Now buyers would rather settle their obligations rather than take delivery for February and March as destinations are covered and given the volatility in prices and negative import margins," he added.
Dalian's most-active soyoil contract fell 3% while its palm oil contract slipped 3.7%. Soyoil prices on the Chicago Board of Trade were down 1.4%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
($1 = 4.0340 ringgit)
(Reporting by Mei Mei Chu; Editing by Sherry Jacob-Phillips, Rashmi Aich and Vinay Dwivedi) ((Meifong.firstname.lastname@example.org mailto:Meifong.email@example.com))