Crude palm oil futures on Malaysia's derivatives exchange ended lower Friday on a continued slowdown in exports and a rise in production, trade participants said.
The benchmark November contract on the Bursa Malaysia Derivatives exchange ended MYR51 lower at MYR2,544 a metric ton after moving in a MYR2,533-MYR2,566 range.
Soyoil futures declined on CBOT, making the commodity a cheaper alternative relative to its rival palm olein, and prompting heavy selling pressure on the BMD.
"With all these bearish factors, the market could only move in one direction…down," said a Malaysia-based exporter.
Palm olein for September was offered at a $15/ton premium over crude soyoil from Brazil, and was trading at a $35/ton premium over crude soyoil from Argentina.
"Palm olein's current price level isn't "friendly" and there are concerns that export demand would remain sluggish towards the end of the month," said a physical market broker at a Kuala Lumpur-based brokerage.
Palm shipments tracked by cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. fell during the Aug 1-20 period. Intertek estimated exports at 863,289 tons, down 1.8% from the same period in July. SGS estimated exports at 837,526 tons during the first 20 days of August. Both figures are also lower than market expectations of 890,000 tons.
Shipments to China have been dismal. SGS estimated exports to China at 103,290 tons, down from 121,636 tons a month earlier.
State-owned China National Grain & Oils Information Center put domestic vegetable oil reserves at eight million tons, an indication that the country would probably import less.
"Production has risen, albeit gradually, while overseas demand continues to be weak and this can push up inventories. This will put a cap on prices for the time being," said a Kuala Lumpur-based executive at a global trading company.
In the cash market, palm olein for October traded at $885/ton and January/February/March shipment at $850/ton, $852.50/ton and $885/ton, free-on-board Malaysian ports, said a Singapore-based physical market broker.
CME Group Inc.'s dollar-based November CPO futures were trading at $812.75/ton at 1028 GMT, down $5.25 from Wednesday's close.
Rupiah-denominated October CPO futures on the Indonesia Commodity and Derivative Exchange were 1.1% lower at IDR7,480 a kilogram at 1029 GMT.
Open interest on the BMD was 67,893 lots, versus 68,777 lots Thursday. One lot is equivalent to 25 tons.
A total of 19,861 lots of CPO were traded versus 20,611 lots Thursday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Sep'10 2,706 2,742 Down 36 2,715 2,689 Oct'10 2,608 2,647 Down 39 2,621 2,575 Nov'10 2,544 2,595 Down 51 2,566 2,533 Dec'10 2,531 2,583 Down 52 2,550 2,519
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
August 20, 2010 06:42 ET (10:42 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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