KUALA LUMPUR: Malaysian palm oil futures fell over 2 percent to a two-year low on Wednesday evening, tracking weakness in related oils on China’s Dalian Commodity Exchange and as an escalating U.S.-China trade conflict weighed on the market.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 2.4 percent at 2,204 ringgit ($545.95) a tonne at the close of trade, after hitting its lowest since July 14, 2016 at 2,202 ringgit.

The contract posted its sharpest intraday drop in over four months in its second straight session of declines.

Trading volumes stood at 41,205 lots of 25 tonnes each.

“The market is down mainly on external factors,” said a Kuala Lumpur-based trader, referring to related edible oils on the U.S. Chicago Board of Trade and Dalian.

“Especially so on Dalian as the U.S.-China trade war escalates,” she said.

The United States said on Wednesday it would slap 10 percent tariffs on an extra $200 billion worth of Chinese imports, including numerous consumer items, causing a sell-off in Chinese markets and stocks across Asia.

China said the action was completely unacceptable, and that Beijing would respond to the latest moves by Washington.

Palm oil prices have declined 5.2 percent so far this month, with traders jittery over concerns about the U.S.-China trade dispute and on weak demand.

In other related oils, the Chicago December soybean oil contract fell 1.7 percent, while the September soybean oil contract on China’s Dalian Commodity Exchange was down 1.1 percent.

The Dalian September palm oil contract declined 1.7 percent.

Palm oil prices track the performance of other edible oils as they compete for a share in the global vegetable oils market. – Reuters

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