Crude palm oil futures on Malaysia’s derivatives exchange ended lower Monday as weak fundamental cues and a slide in CBOT soyoil prompted investors to book profits.
The new benchmark November contract on the Bursa Malaysia Derivatives exchange ended MYR12 lower at MYR2,678 a metric ton after moving in a MYR2,678-MYR2,730 range.
Many trade participants said CPO prices had risen too quickly last week and a downward price correction was necessary to get prices to reflect current fundamentals.
At the start of the month, CPO prices were hovering at MYR2,570/ton levels but rose to MYR2,737/ton levels in less than two weeks.
A sharp rise in prices prompted cash market buyers to hold off trade due to expectations prices would ease.
"Prices will probably remain in correction mode after the recent rise, which has put buyers off. Investors may continue to book profits, so prices aren't likely to sustain a rally above MYR2,750/ton," said a senior trading executive based in Kuala Lumpur.
A Singapore-based trading executive said trade in the cash market was sluggish, with a $7.50/ton gap between offers and bids and few trades reported.
"It's a timely correction. If prices had kept going up, trading activity in the cash market would be fairly quiet"
Trade participants also fear that a slowdown in exports would lead to higher inventory levels at the end of August.
Cargo surveyor Intertek Agri Services estimated Malaysia's Aug. 1-15 palm oil exports fell 7.4% to 619,435 tons. Another cargo surveyor, SGS (Malaysia) Bhd., estimated exports during the period fell 16% on month to 592,094 tons.
"These (figures) are cues that would prompt a downside price movement," said a trader based in Indonesia.
In the cash market, palm olein for October/November/December shipment was traded at $897.50/ton free on board Malaysian ports, another trader in Singapore said.
CME Group Inc.'s dollar-based November CPO futures were trading $5.75 higher at $846/ton at 0918 GMT, compared with Friday's close of $840.25/ton.
Rupiah-denominated October CPO futures on the Indonesia Commodity and Derivative Exchange were 0.5% lower at IDR7,640 a kilogram at 0919 GMT.
Open interest on the BMD was 65,512 lots versus 63,861 lots Friday. One lot is equivalent to 25 tons.
A total of 24,610 lots of CPO were traded versus 24,669 lots Friday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Sep'10 2,779 2,780 Down 01 2,798 2,771 Oct'10 2,708 2,718 Down 10 2,756 2,706 Nov'10 2,678 2,690 Down 12 2,730 2,678 Dec'10 2,670 2,681 Down 11 2,717 2,670
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
August 16, 2010 06:23 ET (10:23 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
- 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
- India Commodity Prices Including Palm Oil – Agriculture
