KUALA LUMPUR: Malaysian palm oil futures fell nearly 2 percent at the close of trade on Monday after reaching a more than one-week peak, hit by concerns over high stockpiles and expectations that Indonesia would remove its palm oil export levy.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange was down 1.96 percent at 2,000 ringgit ($480.42) a tonne at the end of the trading day, its sharpest daily decline in a week and snapping three sessions of gains.
Palm had opened higher on Monday, rising as much as 1.2 percent to 2,064 ringgit, its highest since Nov. 22.
Trading volumes stood at 52,163 lots of 25 tonnes each at the close of trade.
"Palm opened higher following strength in the Chicago Board of Trade's soybean oil and China's Dalian palm olein futures contracts on positive developments in G20 Summit," a Kuala Lumpur-based trader said.
Chicago soybeans climbed on Monday to their highest in almost six months after the United States and China agreed to a 90-day truce that will permit talks to end a festering trade war that has roiled commodities markets.
"If the market buys more soyoil, palm will be less attractive," said a Singapore based trader.
Traders also said the palm market fell later in the day over concerns of rising stockpiles and expectations that top palm producer and exporter Indonesia will soon implement the removal of its palm oil export levies.
Indonesia said last week it would temporarily remove a levy on palm oil to boost exports after a sharp drop in prices hit farmers. It is expected to take effect once the finance ministry issues the regulation.
In other related oils, the Chicago December soybean oil contract jumped 1.2 percent on Monday, while the January soybean oil contract on the Dalian Commodity Exchange fell 0.7 percent.
Meanwhile, the Dalian January palm oil contract edged down 0.4 percent.
Palm oil is impacted by movements of other edible oils, as they compete for a share in the global vegetable oil market. - Reuters