Crude palm oil futures on Malaysia’s derivatives exchange ended lower Thursday as investors took profits on lower crude oil and an improved supply outlook for March and April, trade participants said.
The benchmark June contract on the Bursa Malaysia Derivatives ended down MYR39 or 1.5% at an intraday low of MYR2,500 a metric ton.
The June contract had breached key resistance at MYR2,530, then MYR2,510 in late trade, making the market vulnerable to further declines in the next trading session, a senior trading executive based in Kuala Lumpur said.
"Investors were scurrying to take profits after prices weren't able to rise above MYR2,555/ton and it's likely prices may ease to around MYR2,460, as there are many bearish factors weighing on prices," he said.
The rally in the ringgit, which has gained 6.6% so far this year, was the "biggest impact to the decline in palm oil prices," said Lee Shin Cheng, executive chairman at IOI Corp. The currency's strength weighs on palm oil prices as it makes CPO, a key feedstock for refiners, more expensive and narrows their profit margins.
Lee also expects CPO output at its company to decline 8% in the 2010 fiscal year due to a labor shortage at its estates and an El-Nino weather condition last year that reduced rains and sapped palm fruit yields.
Palm production at IOI, the second largest listed palm producer in Malaysia, totaled 3.63 million tons in the 2009 fiscal year, according to the company's 2009 annual report.
Also weighing on palm prices is improved palm output in April, which may boost supply of the oil in the country, trade participants said.
March output is likely to have risen as well, between 7%-16% on month, as February was a shorter month and harvesting activity had spilt over to March, plantation company executives and traders said.
February CPO output totaled 1.16 million tons, according to the Malaysian Palm Oil Board.
The government-backed MPOB is scheduled to release March export, production and inventory data Monday.
In the cash market, palm olein for July/August/September shipment traded at $807.50/ton and $810/ton, May/June at $812.50/ton, and October/November/December at $795/ton, free-on-board Malaysian ports, a Singapore-based trading executive said.
Cash CPO for prompt delivery was offered MYR10 lower at MYR2,560/ton.
Open interest on the BMD was 78,915 lots, up from 78,794 lots Wednesday. One lot is equivalent to 25 tons.
Some 17,847 lots were traded versus 12,606 lots Wednesday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Apr 2010 2,550 2,572 Down 22 2,578 2,550 May 2010 2,520 2,550 Down 30 2,563 2,520 Jun 2010 2,500 2,539 Down 39 2,555 2,500 Jul 2010 2,495 2,530 Down 35 2,545 2,495
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
-0
(MORE TO FOLLOW) Dow Jones Newswires
April 08, 2010 07:15 ET (11:15 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
More Recent Palm Oil News 
- CPO Rises To Two Week High; Industry Data In Focus
- Crude Palm Oil Ends Up On Weekend Short Covering; Upside Limited
- Crude Palm Oil Recovers Late On Short Covering
- Crude Palm Oil Ends Down As Demand Prospects Weaken
- Crude Palm Oil Rises Slightly; Weak Demand Limits Upside
- Crude Palm Oil Ends Up On South America Crop Worries
- Crude Palm Oil Rises On Pre-Holiday Short-Covering
- Crude Palm Oil Falls Due To Bearish Export Outlook
- Crude Palm Oil Ends Higher On South America Weather
- Crude Palm Oil Ends Down On Profit Taking; USDA Report In Focus
- Crude Palm Oil Rises In Light Trade; USDA Data In Focus
- Crude Palm Oil Steady; South America Weather May Underpin
- Crude Palm Oil Ends Up In Light Trade; Fresh Cues Awaited
- Crude Palm Oil Ends Up On Weather Concerns; More Gains Likely
- Crude Palm Oil Ends Down On Profit Taking, Europe Worries
PRO Palm Oil Live Market News
- China Dalian Commodity Exchange Grain Stocks, Feb 09
- BMD Crude Palm Oil (CPO) Rebounds But Higher Stocks Cap Gains
- China Dalian Grain Futures Closing Prices, Volume
- Malaysian AM Cash Market Prices For Palm Oil – Feb. 9
- BMD Crude Palm Oil (CPO) Falls With Other Commodities; Stocks Weigh
- BMD Crude Palm Oil (CPO) Slips In Choppy Trade; MYR3,120 Support
- BMD Crude Palm Oil (CPO) Tipped To Open Up But Upside Limited
- Asia-Pacific Commodities Events Calendar
- Southeast Asia Palm Oil Weather – Feb 8
- European Veg Oil PM Palm Oil & Lauric Oil Prices – Feb 8
- European Veg Oil AM Palm Oil & Lauric Oil Prices – Feb 8
- India Commodity Prices Including Palm Oil – Agriculture
- CPO Rises To Two Week High; Industry Data In Focus
- Indonesia PT KPB Sells 6,500 Tons Crude Palm Oil (CPO) At Auction Wednesday
- Malaysian PM Cash Market Prices For Palm Oil – Feb. 8
