SINGAPORE (Reuters) - Malaysian palm oil futures fell for a seventh consecutive session on Thursday to a three-month low, as concerns over slowing demand and rising production dragged down the market.
There was further pressure on prices as Europeans reduce consumption amid environmental concerns associated with the tropical product.
The benchmark third-month palm oil contract on the Bursa Malaysia Derivatives Exchange fell 1.5 percent to 2,060 ringgit ($503.91) a tonne by the midday break. Earlier in the session, the contract dropped to its weakest since mid-December at 2,057 ringgit a tonne.
Global palm oil demand may suffer its first contraction in two decades during the 2019/20 crop year due to rising domestic oilseed supplies in top buyer India and slowing demand in Europe and China, industry participants told Reuters.
“There is ample supply of palm oil in consuming countries, both India and China, that is why you see pressure on prices,” said one Singapore-based trader.
The European Commission has concluded that palm oil cultivation results in excessive deforestation and its use in transport fuel should be phased out, setting the bloc on a collision course with major palm oil producers Malaysia and Indonesia.
The Commission published its criteria on Wednesday for determining what crops cause environmental harm, part of a new EU law to boost the share of renewable energy to 32 percent by 2030 and determine what are appropriate renewable sources.
Palm oil may retest a support at 2,069 ringgit per tonne, a break below which could cause a loss to 2,035 ringgit, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.
Malaysia kept its export duty on crude palm oil for April at zero percent, according to a circular on the Malaysian Palm Oil Board’s website on Wednesday that cited the national customs department.
Indonesia has also set zero palm export levy for shipments in the months of March to May, finance ministry regulation released on Wednesday showed.
In related oils, the Chicago soybean oil was down 0.2 percent and the most-active soyoil contract on the Dalian Commodity Exchange fell 1 percent.
($1 = 4.0880 ringgit)
($1 = 69.59 Indian rupees)
($1 = 6.71 Chinese yuan)
(1 Indian rupee = $0.0144)
(1 Chinese yuan = $0.1490)
Reporting by Naveen Thukral; Editing by Subhranshu Sahu