Crude palm oil futures on Malaysia’s derivatives exchange fell Tuesday, unable to sustain earlier gains as profit-taking and long liquidation set in.
The July contract on the Bursa Malaysia Derivatives exchange ended MYR10 lower at MYR2,550 a metric ton, tumbling from an intraday high of MYR2,581/ton, benchmark contract’s highest level since April 9.
CPO futures traded in both positive and negative territory, with technical buying giving way to profit-taking toward the end of trading session as investors took cues from retreating crude oil prices, trade participants said.
Light, sweet crude for June delivery on the New York Mercantile Exchange fell to as low as $83.06 a barrel during Asian trading hours, down 1.4%. The June contract was trading 99 cents lower at $83.21/bbl at 1015 GMT.
Many trade participants said weak export demand for palm products, including refined palm olein is due to its premium over crude soyoil from Argentina. Palm olein has been trading at a $5/ton premium over rival soyoil over the past week, and buyers may be switching to the–at least for the time being–cheaper soyoil.
Palm olein traditionally trades at a discount wider than $100/ton to soyoil, but a likely fall in crude palm oil output this year amid a record South American soybean crop has changed price dynamics between the two vegetable oils.
"Refined, bleached and deodorized palm olein's usual discount (to soyoil) will take a long time to re-appear," Dorab Mistry, director at Godrej International Ltd., told an industry conference in Dubai over the weekend.
CPO's upside may be limited in 2010 as "the weakness in the soy complex and narrow price difference between CPO and soyoil will cap (gains in) prices," said Sunaina Dhanuka, an analyst at Macquarie Securities in Kuala Lumpur.
But concerns that April palm oil output may fall limited the decline of CPO futures, said an executive at Kuala Lumpur-based brokerage.
In the cash market, palm olein for June was traded at $825/ton, July/August/September at $817.50-$822.50/ton, October/November/December $815/ton, FOB Malaysian ports, a Singapore-based trading executive said.
Cash CPO for prompt shipment was offered unchanged at MYR2,580/ton.
Open interest on the BMD was 66,735 lots, versus 68,733 lots Monday. One lot is equivalent to 25 tons.
A total of 14,482 lots of CPO were traded versus 13,447 lots Monday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low May'10 2,558 2,575 Down 17 2,600 2,558 Jun'10 2,562 2,568 Down 06 2,588 2,545 Jul'10 2,550 2,560 Down 10 2,581 2,535 Aug'10 2,545 2,555 Down 10 2,576 2,532
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
April 27, 2010 06:58 ET (10:58 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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