The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed to trade down 2.97%, 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.
“The sharply lower crude oil prices amid increasing new coronavirus cases outside of China also impacted the sentiment.”
The contract lost 1.4% last week, with prices touching their lowest level since November 2019, due to falling exports as the virus forced millions in China, the second-largest buyer of palm oil, to stay at home in a bid to contain the disease.
Fears grew on Monday that the outbreak in China will grow into a pandemic, after sharp rises in infections in South Korea, Italy and Iran.
Meanwhile, the Malaysian Palm Oil Association forecast Feb. 1-20 production to increase by 17.4%, 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 0.8%, while its palm oil contract dropped 2%. Soyoil prices on the Chicago Board of Trade were also declined 2.2%.
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 0.9%. A weaker ringgit makes palm cheaper for holders of foreign currency.