KUALA LUMPUR, May 2: Malaysian crude palm oil futures fell as much as 2.6 per cent on Friday, hitting a three-week low as weak vegetable oil prices and slowing demand weighed on the market.

Palm oil prices, which have meandered for the past few weeks, are falling on a bearish mix of factors, including cuts in Indonesian export taxes, a firmer ringgit against the dollar and dismal Asian demand, though some traders say a recovery is possible.

The benchmark July contract on the Bursa Malaysia Derivatives Exchange dropped as much as 89 ringgit to 3,306 ringgit ($1,045) per ton, a level not seen since April 9, before settling down 54 ringgit at 3,341 ringgit.

Palm oil’s long-term trend is worrying. There appears to be no further increase in buying from China and India, and soyaoil markets are getting battered by signs that Argentine farmers will sign a truce with the government, said a local commodities trading manager.

Other traded months fell between 20 and 75 ringgit.

Overall trade dropped to 3,489 lots of 25 tons each from the usual 10,000 lots.

Talk that the Argentine farmer strike had been averted until at least May 25 added weakness to soy markets, traders said. The strike in March stalled soy movement and sent prices up.

Exports of Malaysian palm oil in April recovered from steep losses earlier in the

month but only posted up to a 7.4 per cent increase in sales, cargo surveyors said, which prompted many traders who held long positions in the market to sell.

India, the world’s biggest vegetable oil importer after China, is likely to buy 7 per cent more this year but is not expected to cut import duty further despite high inflation, a leading refiner said on Wednesday.

In Malaysia’s physical market, crude palm oil for May shipment in the southern regions was quoted at 3,310/3,330 ringgit a ton. Trades were done between 3,300 and 3,310 ringgit.—Reuters