Crude palm oil futures on Malaysia’s derivatives exchange edged to a three-and-a-half week low Tuesday, hurt by a weak outlook for Malaysian exports and a fall in crude oil prices.
The benchmark November contract on the Bursa Malaysia Derivatives exchange ended MYR50 or 2% lower at MYR2,510 a metric ton after tumbling as much as 2.3% to MYR2,502/ton, its lowest level since July 28.
Traders estimate Malaysia's palm oil exports to be around 992,000 tons during the Aug. 1-25 period. That would be 7% to 9% less than the figures reported for the same period in July by two cargo surveyors, Intertek Agri Services and SGS (Malaysia) Bhd.
Prices were trading mostly in negative territory after preliminary data from an industry body estimated that Malaysia's August production had risen 8.6% so far this month, with the bulk of the growth from the key palm oil producing state of Sabah.
CPO futures have now fallen 8.6% from their 15-month high of MYR2,736/ton hit Aug. 9.
Traders now expect futures to fall further towards the MYR2,460-MYR2,480/ton level, given there doesn't appear to be strong demand now for palm oil.
"End-August stocks will probably be quite high, as some Indonesian traders will rush to ship palm oil to Malaysian ports as the government may raise the export tax in September," said a Kuala Lumpur-based senior trading executive.
Traders said Indonesia may raise the CPO export tax to 6% from the current 3% in September due to higher global palm prices.
December soyoil on the Chicago Board of Trade was trading 7 points lower at 39.75 cents/lb on e-CBOT by the end of trade on BMD.
At 1003 GMT, October crude was trading 92 cents lower at $72.18 a barrel on Globex.
In the cash market, many trades were reported, with October traded at $897.50/ton and November/December at $857.50 and $860/ton. January/February/March shipments were traded from $840-$845/ton free-on-board Malaysian ports, said a Singapore-based physical market broker.
CME Group Inc.'s dollar-based November CPO futures were trading at $795.50/ton at 1009 GMT, down $19 from Monday's close.
Rupiah-denominated October CPO futures on the Indonesia Commodity and Derivative Exchange were 2.0% lower at IDR7,390 a kilogram at 1008 GMT.
Open interest on the BMD was 69,199 lots, versus 67,636 lots Monday. One lot is equivalent to 25 tons.
A total of 28,938 lots of CPO were traded versus 18,403 lots Monday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Sep'10 2,670 2,717 Down 47 2,717 2,667 Oct'10 2,570 2,628 Down 58 2,633 2,569 Nov'10 2,510 2,560 Down 50 2,567 2,502 Dec'10 2,481 2,540 Down 59 2,543 2,477
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
August 24, 2010 06:36 ET (10:36 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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