Crude palm oil futures prices on Malaysia’s derivatives exchange ended lower Tuesday, as investors took profits following lackluster trade overnight in crude oil and soyoil futures, trade participants said.
The benchmark February contract on the Bursa Malaysia Derivatives exchange ended MYR8 lower at MYR2,478/ton after trading in range of MYR2,430-MYR2,480/ton.
"Prices were due for a correction as palm oil went up too fast, too soon yesterday," said a senior trading executive in Kuala Lumpur.
The February contract stayed above the MYR2,420 level throughout the day, as palm oil's supply-demand fundamentals are supporting prices and a discount of $150/ton to soyoil prices makes it the less expensive choice for vegetable oils importers.
Palm oil prices were also supported by lower palm oil output in November, as continuing monsoon rains bring floods in the oil palm growing regions in peninsular Malaysia, Sabah and Sarawak, and threaten to disrupt transportation of oil palms to mills and refineries.
Planters expect November palm oil output to be 10%-15% lower than in the previous month.
While Nov. 1-25 palm oil exports are likely to have risen only a marginal 1.2% from the same period last month to 1.13 million tons, traders expect buyers to be more aggressive with purchases of palm oil in the physical market next week and through the first week of December, as importers in the region are keen to lock in supplies for January.
Cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. are scheduled to issue Malaysia Nov. 1-25 palm oil shipments Wednesday.
Export demand from China and Europe may lead to a stock drawdown in November, trade participants said.
However, the drawdown in inventories may not be large, as palm oil imports from Indonesia may remain high while the government hasn't imposed an import tax on the commodity, another senior trading executive in Malaysia said.
Traders and shipping executives now expect November's exports to decline to 1.37 million tons, from the 1.42 million-1.43 million tons shipped in October.
New York Mercantile Exchange light, sweet crude for January delivery was trading 2 cents lower at $77.54 a barrel on Globex at 1035 GMT.
In the cash market, cash palm olein for December was offered $10 lower at $750/ton, free on board Malaysian ports. CPO for January was traded $712.50/ton, FOB Indonesian ports, a Singapore-based trading executive said.
Cash CPO for prompt delivery was offered MYR10 higher at MYR2,410/ton.
A total of 16,328 lots of CPO were traded on the BMD versus 17,388 lots Monday.
Open interest was 94,922 lots Tuesday, down from 95,832 lots. One lot is equivalent to 25 tons.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Dec 09 2,450 2,465 Dn 15 2,442 2,409 Jan 10 2,466 2,480 Dn 14 2,466 2,417 Feb 10 2,478 2,486 Dn 08 2,480 2,430 Mar 10 2,483 2,499 Dn 16 2,483 2,437
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
November 24, 2009 06:01 ET (11:01 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.
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