Crude palm oil futures on Malaysia’s derivatives exchange ended lower Tuesday as fears that inventory levels could rise as export demand wanes prompted investors to book profits.
The benchmark November contract on the Bursa Malaysia Derivatives exchange settled MYR32 lower at MYR2,646 a metric ton, after tumbling to MYR2,637/ton, its lowest level since Aug. 6.
Palm prices had previously rallied with support from strength in soy futures and ongoing concerns about disruption of harvests by heavier-than-expected rainfall in Malaysia, the second-largest palm producer in the world after Indonesia.
But forecasts of scant rain in the next 10 days in the key oil palm state of Sabah by the Malaysian Meteorological Department and a weaker ringgit took the bullish tone off the palm market, which rose to a 15-month high at MYR2,737/ton last week.
"The market has priced in the weather-risk premium and may trade around the MYR2,600-MYR2,650/ton range in the near term," said a senior trading executive in Kuala Lumpur.
Uncertainty rises during the higher palm production cycle in the second half of the year, and the market tends to build a risk premium into prices during this period.
Preliminary estimates by several palm producers in Malaysia indicated that output has risen 4%-6% so far this month. July output reached 1.52 million tons, according to data issued on Aug. 10 by the government-linked Malaysian Palm Oil Board.
"With exports likely to reach only 1.25 million-1.35 million tons in August, we may see a rise in end-month stock levels," said an executive at a Kuala Lumpur-based global trading company. The MPOB put July exports at 1.47 million tons.
In the cash market, palm olein for January/February/March shipment was traded at $877.50/ton, free-on-board Malaysian ports, a Singapore-based physical market broker said.
CME Group Inc.'s dollar-based November CPO futures were trading at $837.50/ton at 0946 GMT, down 25 cents from Monday's close.
Open interest on the BMD was 65,056 lots, versus 65,512 lots Monday. One lot is equivalent to 25 tons.
A total of 21,590 lots of CPO were traded versus 24,610 lots Monday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Sep'10 2,766 2,779 Down 13 2,779 2,750 Oct'10 2,686 2,707 Down 21 2,709 2,670 Nov'10 2,646 2,678 Down 32 2,679 2,637 Dec'10 2,636 2,670 Down 34 2,667 2,627
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
August 17, 2010 06:39 ET (10:39 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
- Asian Crude Palm Oil Ends Down On Profit-Taking; Industry Data In Focus
- Malaysian PM Cash Market Prices For Palm Oil – Feb. 9
- Malaysia Feb. 1-10 Palm Oil Exports Likely Reached 338,000 Tons -Executives
- *Malaysia Feb. 1-10 Palm Oil Exports Likely Reached 338,000 Tons -Executives
- 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
