Vegoils: Malaysian palm oil hits five-week low on lean demand

JAKARTA (Reuters) - Malaysian palm oil futures extended losses to a five-week low on Tuesday, weighed down by the government's decision to maintain export tax for July and on lacklustre demand.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 0.42 percent to 2,350 ringgit ($589.42) per tonne in morning trade, the lowest since May 4.

Trading volumes stood at 17,675 lots of 25 tonnes each.

Malaysia, the world's second-largest palm oil producer, kept its crude palm oil export tax at 5 percent in July. The tax was resumed in May, after a four-month hiatus to increase demand and boost prices.

"It looks like the market is still reacting towards weak sentiment over sluggish exports," said David Ng of Phillip Futures.

Malaysia's exports of palm oil, an ingredient for soaps as well as chocolates, between June 1 and June 10 stood at 324,947 tonnes, down 20 percent from the same period a month earlier.

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

On the Dalian Commodity Exchange, the September soybean oil contract dropped as much as 0.35 percent, while the July soybean oil contract on the Chicago Board of Trade rose slightly up to 0.03 percent.

(Reporting by Kanupriya Kapoor, Editing by Sherry Jacob-Phillips)