Crude palm oil futures on Malaysia’s derivatives exchange rose for the sixth day Tuesday, amid hopes January palm oil output may have declined 13%-15% from a month earlier, trade participants said.
The benchmark April CPO contract on the Bursa Malaysia Derivatives ended up MYR11, or 0.4%, at MYR2,561 a metric ton, after rising to an intraday high of MYR2,570/ton. CPO futures last rose to this level on Jan. 12.
Palm oil inventories may have declined from December's level of 2.24 million tons to around 2.0 million tons, plantation company executives and trade participants said.
Most companies have reported a decline in output, with reductions mostly between 12% and 26%, according to preliminary data from an industry association.
"A likely rise in exports to around 400,000 tons for the first 10 days in February supported CPO futures," said a Kuala Lumpur-based trading executive.
Cargo surveyors put exports for the Jan. 1-10 period around 346,462-351,818 tons.
Cargo surveyors and the Malaysian Palm Oil Board are expected to issue export estimates Wednesday.
Palm oil prices "will likely hold near current levels" due to rising food demand from major vegetable oils buyers China and India, and the increasing use of biofuels, rating agency Fitch said in a report.
"Consumption in populous countries, such as China and India, is expected to continue to drive demand growth for crude palm oil, while further support could come from potentially higher biodiesel mandates following the upturn in oil prices," it said.
China's palm oil imports in February are likely to rise 1.5% to 355,787 tons from 350,636 tons in January, according to a forecast by China's Commerce Ministry.
In the cash market, palm olein for April/May/June traded at $777.50/ton and $780/ton, said a Singapore-based trader.
Cash CPO for prompt shipment was offered MYR5 higher at MYR2,580/ton.
Open interest on the BMD was 76,079 lots Tuesday, down from 76,779 lots. One lot is equivalent to 25 tons.
Some 15,505 lots of CPO were traded versus 15,199 lots Monday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Feb 2010 2,560 2,560 Unchanged 2,562 2,560 Mar 2010 2,560 2,554 Up 06 2,573 2,552 Apr 2010 2,561 2,550 Up 11 2,570 2,545 May 2010 2,555 2,545 Up 10 2,565 2,540
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
February 09, 2010 05:56 ET (10:56 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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