KUALA LUMPUR, April 25: Malaysian crude palm oil futures fell 1.2 pc on Friday as dismal export data from cargo surveyors heightened fears of a slowdown in demand amid worries of a possible cut in Indonesian export taxes.

Palm oil prices, which have fallen around 24 per cent from record highs last month, were expected to head lower in coming weeks on ringgit strength and a higher production cycle, traders said.

The benchmark July contract settled down 41 ringgit to 3,419 ringgit ($1,084) per ton after going as low as 3,388 ringgit. Other traded months fell between 32 and 103 ringgit.

Traders said a high possibility Indonesia would reduce export taxes of palm oil to 15 per cent in May from 20 per cent ignited fears that any new orders for palm cargoes would be meant for Indonesia rather than Malaysia.

Apart from sluggish demand, Malaysia is undergoing a higher production cycle, with an analyst forecasting output in April would likely rise 5pc from last month on the back of widespread rains.

Malaysia’s crude palm oil output is expected to rise to 16.5 million tons this year from 15.8 million tons in 2007 as soaring palm oil prices have led to conversion of marginal land into plantations, the country’s commodities minister said on Thursday.

Indonesia and Malaysia are still committed to allocating a maximum 6 million tons of crude palm oil for biodiesel, although it will take years to meet the commitment, agriculture officials from both countries said on Friday.

In Malaysia’s physical market, crude palm oil for April shipment in the southern region was quoted at 3,385/3,400 ringgit a ton. Trades were done at 3,400 ringgit.—Reuters