KUALA LUMPUR: Malaysian palm oil futures dropped more than 1pc to their lowest in nearly two years on Tuesday, weighed down by the government’s decision to maintain an export tax for July and due to lacklustre demand. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange dropped 1.44 per cent to 2,326 ringgit ($583.25 per tonne by the close of trade, the lowest since August, 2016. Prices dropped as low as 2,323 ringgit during the day and trading volumes stood at 59,383 lots of 25 tonnes each.

Malaysia, the world’s second-largest palm oil producer, kept its crude palm oil export tax at 5pc in July. The tax was resumed in May, after a four-month hiatus to increase demand and boost prices.

“Going forward the market is very concerned about demand, because it’s not picking up as it should. Production is also supposed pick up and that will put further pressure on inventories and prices,” said David Ng of Phillip Futures.

Published in Dawn, June 13th, 2018