Malaysian palm oil prices fell sharply on Tuesday, hitting their lowest level since early August, after Argentina temporarily lifted export duties on soybean oil. The move made soybean oil cheaper than palm oil, triggering global market reactions.
Benchmark palm oil contracts for December delivery on the Bursa Malaysia Derivatives Exchange dropped 102 ringgit, or 2.3%, closing at 4,341 ringgit (US$1,034.56) per metric tonne. Analysts said falling soybean oil prices and recent pressure on the ringgit weighed on investor sentiment.
Argentina’s suspension of export duties on grains and byproducts aims to boost overseas sales and generate dollars to support the weakening peso. The measure will remain in effect until the end of October, targeting US$7 billion in exports. The news sparked sell-offs in Chicago and Dalian markets, which spread to the palm oil sector.
Despite the drop, losses in palm oil were limited by slower production in Malaysia and expectations of lower yields in the fourth quarter due to the monsoon season. Duty-free Argentine soybean oil is now cheaper for buyers in Africa and India, according to traders.
Soybean oil and palm oil compete globally, and price movements in one often affect the other. Crude oil prices rose slightly, which could make palm oil a more attractive option for biodiesel production.
