Crude palm oil futures on Malaysia’s derivatives exchange stumbled Wednesday on concerns that inventory levels will rise further as export demand declines.
The benchmark November contract on the Bursa Malaysia Derivatives exchange ended MYR24 or 1% lower at MYR2,486 a metric ton after moving in a MYR2,486-MYR2,526 range.
"The export figures aren't promising and external markets and weaker soyoil aren't providing supportive cues either," said an analyst in Singapore.
Palm oil exports fell 7.6% to 992,319 tons during the Aug. 1-25 period compared with 1.07 million tons during the same period in July, cargo surveyor Intertek Agri Services said. Another surveyor, SGS (Malaysia) Bhd., put shipments at 939,456 tons, down 15% on month.
SGS data showed palm purchases by China, a major vegetable oils consumer, had declined 46% to 112,690 tons during the Aug. 1-25 period.
"Vegetable oils stocks at Chinese ports remain high at around 500,000 tons. Until stocks are reduced further, buyers won't be stepping up their purchases," said a trading executive in Hong Kong.
Shipments to Pakistan also fell 57% to 83,174 tons, while exports to the U.S. dropped 42% to 81,766 tons, the SGS data showed.
"The only factor that is a little supportive is the major plantation firms ceasing milling operations, harvesting activities for two weeks due to the Eid ul-Fitr celebration," said a trading executive at a Kuala Lumpur-based brokerage.
"From a technical perspective, it's unlikely that speculators will short the market further at current levels, as the market would have factored in the negative cues," the executive said.
Some trade participants said CPO would fall further and may ease towards MYR2,450-MYR2,480/ton levels as a rising soybean crop in the U.S. would boost supplies of soyoil and put pressure on the commodity.
Still, the market will probably remain rangebound ahead of a vegetable oils market outlook presentation by top vegetable oils analyst Dorab Mistry in Brazil Thursday.
In the cash market, palm olein for October was traded at $870/ton and $872.50/ton, November/December at $830/ton and January/February/March from $817.50/ton to $832.50/ton, free on board Malaysian ports, said a Singapore-based trader.
CME Group Inc.'s dollar-based November CPO futures were trading at $796.50/ton at 0957 GMT, down $12 from Tuesday's close.
Rupiah-denominated October CPO futures on the Indonesia Commodity and Derivative Exchange were 2.3% lower at IDR7,305 a kilogram at 0956 GMT.
Open interest on the BMD was 68,654 lots versus 69,199 lots Tuesday. One lot is equivalent to 25 tons.
A total of 29,218 lots of CPO were traded versus 28,938 lots Tuesday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Sep'10 2,640 2,670 Down 30 2,671 2,632 Oct'10 2,541 2,570 Down 29 2,590 2,541 Nov'10 2,486 2,510 Down 24 2,526 2,486 Dec'10 2,468 2,481 Down 13 2,499 2,464
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
August 25, 2010 06:51 ET (10:51 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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