Crude palm oil futures on Malaysia’s derivatives exchange erased losses Wednesday, rising on active trade in the physical market and crop concerns as erratic weather likely hurt palm yields, slowing production growth, trade participants said.
The benchmark October contract on the Bursa Malaysia Derivatives exchange ended MYR10 higher at MYR2,495 a metric ton after moving in a MYR2,470-MYR2,502 range.
A weaker ringgit boosted support for prices as it make CPO, a key feedstock for palm refiners, less expensive. The dollar rose to MYR3.1910 versus Tuesday’s level of MYR3.1820.
The rise in prices was also aided by increased demand in the physical market, cash market brokers said.
“Buyers are concerned that the nearby supply of palm may be tight and stepped up purchases,” said a cash market broker in Singapore.
The rise in soyoil futures also lent support to the rally in palm prices.
September soyoil on the Chicago Board of Trade was trading 5 points higher at 38.61 cents a pound by the end of trade on the BMD.
In the cash market, palm olein for September traded at $820/ton, $822.50/ton and $825/ton.
October/November/December shipment traded at $810/ton, $812.50/ton free on board Malaysian ports, said another Singapore-based physical market broker.
Growers and traders are concerned that the La Nina, which brings heavier-than-usual rainfall, may hurt yields and slow down transportation of palm fruits to refiners and mills, even as palm trees go into the high production season.
“There’s also a rising concern that India, a major buyer of vegetable oils, may slow down purchases of palm oil as revival of its seasonal monsoon may boost its domestic supplies,” said a senior trading executive at Kuala Lumpur-based brokerage.
The June-September monsoon in India is crucial for summer-sown crops such as rice, sugar cane, pulses, cotton and oilseeds as about 60% of its farmland is rain-fed.
Cash CPO for prompt delivery was offered MYR20 higher at MYR2,580/ton.
CME Group Inc.’s dollar-based CPO futures weren’t traded during Asian hours.
Rupiah-denominated October CPO futures on the Indonesia Commodity and Derivative Exchange were trading 0.4% higher at IDR6,795 a kilogram at 1007 GMT.
Open interest on the BMD was 69,238 lots, versus 68,489 lots Tuesday. One lot is equivalent to 25 tons.
A total of 10,792 lots of CPO were traded versus 17,747 lots Tuesday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Aug'10 2,571 2,555 Up 16 2,572 2,546 Sep'10 2,528 2,505 Up 23 2,530 2,500 Oct'10 2,495 2,485 Up 10 2,502 2,470 Nov'10 2,483 2,468 Up 15 2,492 2,464
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
July 28, 2010 06:46 ET (10:46 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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