KUALA LUMPUR, July 21: Malaysian crude palm oil futures dived 5.7 per cent on Monday to a near four-month low as crude oil’s steepest ever one week slide last week battered vegetable oil markets from the United States to China.

Argentina’s move to repeal a controversial export tax on soya also weighed on Malaysian palm futures. Chicago Board of Trade soyaoil also fell.

Although palm oil’s correlation to crude oil is minor, overall weakness in crude oil has seeped everywhere. A trader said the market’s performance on Tuesday would depend much on Chicago Board of Trade soyaoil overnight.

Shares in Malaysian palm plantation companies, which have weakened in recent weeks on listless palm oil prices, were caught up in the sell-off.

Malaysia’s largest listed palm planter, Sime Darby dropped as much as 4.5 per cent. It ended down 1.9 per cent at 7.60 ringgit.

Buyers in China, India and Middle East nations tend to stock up at least two months before the Asian festival season begins in early September with the Muslim fasting month of Ramazan.

But the prospect of higher vegetable oil supply from Argentina, the world’s third largest soy exporter, after a tax hike was repealed last week may see palm oil’s market share erode, other traders say.

Palm oil’s discount to soyoil is expected to narrow in the coming days given that levies on Argentine oilseeds exports will return to fixed rates, dealers said. Last week, soyoil’s premium to palm oil stood at $400 per ton.—Reuters