Crude palm oil futures on Malaysia’s derivatives exchange ended up Monday rising as much as 1.75% to the highest level since Jan. 12 following fresh buying and short covering.
Crude oil's rise to an intraday high of $72.39 a barrel amid a hiatus in the strengthening of the dollar lent support to the BMD as well, said trade participants.
The benchmark April CPO contract on the Bursa Malaysia Derivatives ended up MYR29, or 1.2%, at MYR2,550 a metric ton, close to an intraday high of MYR2,563/ton.
"Prices may continue to trade higher in the next (trading) session as some investors have turned bullish and are expecting a positive export/output report this week," said a Kuala Lumpur-based exporter.
CPO futures have declined by 5.5% since the beginning of this year due to a likely record soybean crop in South America, an indication global vegetable oil supply may outstrip demand.
Palm oil prices move in tandem with soyoil prices as both compete for similar export destinations.
At 0930 GMT, light, sweet crude oil on the New York Mercantile Exchange was trading $1.12 higher at $72.31 a barrel.
In other news, Indonesia's government plans to limit the amount of palm oil that can be exported in crude form within the next five years, in a bid to develop its downstream palm industry and add value to the country's economy, said Mohamad S. Hidayat, Indonesia's Industry Minister.
The government will only allow 50% of palm oil to be exported in crude form starting from 2015, and will lower the cap to 30% by 2020, Hidayat said.
However, the export cap applies only to crude palm oil and not to products refined from crude palm oil, he said.
"We're aiming to produce 30 different types of processed products from crude palm oil by 2014. At the moment, we are only producing 17 types," said Hidayat.
Indonesia also plans to increase its annual crude palm oil output, with an output target of 40 million tons by 2020, he said.
Last year, Indonesia produced 21 million tons of crude palm oil and exported 15.5 million tons.
Malaysia's CPO output declined 1% to 17.6 million tons in 2009 while exports rose 2.9% to 15.9 million tons, according to data from the Malaysian Palm Oil Board. Malaysia and Indonesia account for 41% and 46% respectively of global CPO output.
In the cash market, palm olein for April/May/June traded at $777.50/ton and July/August/September at $775/ton, said a Singapore-based trader.
Open interest on the BMD was 76,779 lots Monday, up from 74,744 lots. One lot is equivalent to 25 tons.
Some 15,199 lots of CPO were traded versus 15,199 lots Friday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Feb 2010 2,560 2,525 Up 35 2,570 2,555 Mar 2010 2,554 2,530 Up 30 2,566 2,546 Apr 2010 2,550 2,521 Up 29 2,563 2,542 May 2010 2,545 2,519 Up 26 2,558 2,541
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(Fawziah Selamat in Jakarta contributed to this article.)
(END) Dow Jones Newswires
February 08, 2010 05:43 ET (10:43 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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