KUALA LUMPUR: Malaysian palm oil futures tumbled on Monday, dragged down by concerns about demand due to the spread of the coronavirus outbreak and amid prospects for higher production.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed to trade down 2.97 per cent, to 2,544 ringgit ($607.45).

“Palm oil prices are following weakness in soybean oil on the Chicago Board of Trade and RBD palm olein futures on the Dalian Commodity Exchange,” said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.

Meanwhile, the Malaysian Palm Oil Association forecast Feb 1-20 production to increase by 17.4pc, in line with the Southern Peninsular Palm Oil Millers Association’s expectations of higher output, traders said.

Palm oil also tracked losses in rival edible oils. Dalian’s most-active soyoil contract fell 0.8pc, while its palm oil contract dropped 2pc. Soyoil prices on the Chicago Board of Trade were also declined 2.2pc.

A Kuala Lumpur-based trader said a depreciating ringgit would not be enough to help the palm oil price higher against a backdrop of a global spread of the virus and rising output.

The ringgit palm’s currency of trade fell 0.9pc. A weaker ringgit makes palm cheaper for holders of foreign currency.

Published in Dawn, February 25th, 2020