Crude palm oil futures on Malaysia's derivatives exchange snapped an eight-day rally as the weakness in export demand and lower crude oil prompted investors to book profits Tuesday, trade participants said.
The benchmark October contract on the Bursa Malaysia Derivatives exchange ended MYR30 or 1.2% lower at MYR2,424 a metric ton after moving in a MYR2,424-MYR2,457 range.
Cargo surveyor Intertek estimated July 1-20 palm shipments declined 3% to 879,018 tons. Another surveyor SGS (Malaysia) Bhd., put the figure at 870,604 tons, down 4.8% on month.
Data from SGS showed shipments to India and China, both major vegetable oil buyers, had declined. Shipments to China fell 58% on month to 121,636 tons and 7.6% to India.
August crude oil on the New York Mercantile Exchange was trading 21 cents lower at $76.33 a barrel on Globex at 1044 GMT.
Prices have risen 4.9% since the beginning of the month, to a level "that isn't reflecting the commodity's fundamentals," said S. Paramalingam, executive director at Kuala Lumpur-based brokerage Pelindung Bestari Sdn. Bhd.
"Market data indicated that CPO had only risen on short-covering, there is hardly any significant fresh buying interest the past few weeks."
He also said current palm prices may steer buyers away from the commodity as it wasn't competitive vis-à-vis rival soyoil.
Palm prices used to trade at a wide discount to soyoil, but a record soybean crop in South America has pressured soyoil prices lower, with a $100-a-ton discount flipping to a premium of around $5/ton, luring buyers to step up soyoil purchases.
"Palm prices may extend losses in the next trading session, but the downside will be capped by sluggish growth in CPO production so far," said a senior executive at global trading company.
In the cash market, palm olein for September was traded at $800/ton, free on board Malaysian ports, a Singapore-based trading executive said.
Cash CPO for prompt delivery was offered MYR10 lower at MYR2,510/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 0.1% lower at IDR6,535 a kilogram at 1017 GMT, with 221 lots changing hands. One lot equals 10 tons.
Open interest on the BMD was 67,704 lots, versus 68,762 lots Monday. One lot is equivalent to 25 tons.
A total of 17,134 lots of CPO were traded versus 13,739 lots Monday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Aug'10 2,503 2,504 Down 01 2,515 2,494 Sep'10 2,451 2,474 Down 23 2,479 2,451 Oct'10 2,424 2,454 Down 30 2,457 2,424 Nov'10 2,420 2,449 Down 29 2,450 2,420
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
July 20, 2010 06:48 ET (10:48 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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