Crude palm oil futures on Malaysia's derivatives exchange ended lower in choppy trade Friday tracking long liquidation amid concerns of credit tightening by Chinese banks.
The benchmark April CPO contract on the Bursa Malaysia Derivatives ended MYR6 lower at MYR2,445 a metric ton after moving in both positive and negative territory.
The contract rose in afternoon trade to an intraday high of MYR2,467/ton tracking a likely rise in January exports to around 1.41 million-1.5 million tons but gave up gains towards the end of trade.
"Investors are very concerned that the Chinese government may increase interest rates very soon. That damped sentiment even though Malaysia's palm oil exports in January is tipped to be higher," said a Hong Kong-based trading executive.
Cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd., put exports at 1.20-1.21 million tons in December. Both cargo surveyors are expected to issue export data Monday even though markets will be closed Monday for Federal Territory Day.
Many among trade participants said palm oil's supply and demand fundamentals have turned a tad positive as production has declined amid improving export demand.
"The export growth momentum is expected to continue into February amid likely lower output next month" in tandem with the lower CPO output trend in the first six months of 2010, said a senior executive from Kuala Lumpur-based brokerage.
He said prices may rise to MYR2,500 in February as a decline in CPO output, higher demand for palm oil may prevent a build-up in palm oil inventories in Malaysia. Palm reserves were around 2.24 million tons in December.
In the cash market, palm olein for April/May/June traded at $750/ton and $755/ton, free on board Malaysian ports, said a Singapore-based trader.
Cash CPO for prompt delivery was offered MYR10 lower at MYR2,470/ton.
Open interest on the BMD was 74,003 lots, up from 73,347 lots traded Thursday. One lot is equivalent to 25 tons.
A total of 14,890 lots of CPO were traded versus 15,763 lots Wednesday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Feb 2010 2,450 2,455 Down 05 2,480 2,425 Mar 2010 2,445 2,440 Up 05 2,469 2,420 Apr 2010 2,445 2,451 Down 06 2,467 2,410 May 2010 2,441 2,444 Down 03 2,463 2,410
-By Shie-Lynn Lim, Dow Jones Newswires; +60 3 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
January 29, 2010 06:40 ET (11:40 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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