The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange hit its lowest since Nov. 15,2019 at 2,575 ringgit ($633.46) per tonne when markets closed on Tuesday.
This was the biggest drop since prices fell 10.3% on Oct. 24,2008.
"It is because of the virus (that) all commodities are down," a Kuala Lumpur-based trader told Reuters.
China's death toll from the virus has risen to 106 as of Monday, while the number of total confirmed cases surged to 4,515.
After three months of sharp gains, palm oil prices have declined 15.6% so far in January, mainly after New Delhi slapped curbs on imports of refined palm oil and informally asked traders to halt all palm imports from Malaysia due to a diplomatic row.
India's monthly palm oil imports from Malaysia could fall to their lowest level in nearly nine years in January, traders and refiners told Reuters.
"Market is gripped by.... slowing macroeconomics amidst coronavirus epidemic in China," said Anilkumar Bagani, research head at Sunvin Group, a Mumbai-based vegetable oil broker, adding that demand outlook is clouded by the lack of any positive news.
Bearish sentiment was further confirmed by lower exports. palm oil exports by Malaysia is expected to fall 5.2% in the Jan. 1 to Jan. 25 period, compared with the same period last month, cargo surveyor Amspec Malaysia said on Tuesday.
Also weighing on palm oil prices was soyoil's overnight movement on the Chicago Board of Trade, which hit a six-week low.
It last traded 2.8% lower. palm oil is generally affected by price movements in related oils as its competes for a share in the global vegetable oil market.
Meanwhile, the ringgit fell 0.5% against the dollar, making palm oil cheaper for holders of foreign currencies. ($1 = 4.0650 ringgit) - Reuters