Crude palm oil futures on Malaysia’s derivatives exchange ended off lows Wednesday as investors hunted for bargains after a sharp decline in prices.
The benchmark November contract on the Bursa Malaysia Derivatives exchange ended MYR35 lower at MYR2,535 a metric ton after tumbling as much as 2.5% to MYR2,506/ton, its lowest level since Aug. 26.
"Investors are picking up bargains. But sentiment remains cautious due to bearish domestic cues and waning demand," said an executive at a global trading company.
A steep decline in August palm exports in data released by cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. had pushed prices lower earlier in the day, as it indicates rising palm inventory levels as demand for the commodity wanes.
Intertek's figures showed August palm exports declined 14% on month to 1.22 million tons, while SGS estimated an 18% fall in shipments to 1.15 million tons, against traders' expectations for a 14%-15% drop to around 1.20 million tons.
"As demand from China and India is slowing down, end-August palm inventory levels may rise to around 1.5 million tons," said a Singapore-based trading executive. End-July stocks reached 1.41 million tons, according to data from the Malaysian Palm Oil Board.
"The stumble in the market was also partly due to end-of-month fund selling. Despite weak local cues, the downward trend in prices will be limited prior to the Eid holidays, as most producers will cease operations next week, leading to a (temporary) tightness of oils for the nearby months," said S. Paramalingam, executive director at Kuala Lumpur-based brokerage Pelindung Bestari Sdn. Bhd.
In the cash market, palm olein for September was offered $10 lower at $915/ton. Cash CPO for prompt shipment was offered MYR60 lower at MYR2,680/ton.
CME Group Inc.'s dollar-based November CPO futures were trading $11.50 higher at $806.25/ton at 1010 GMT.
Rupiah-denominated October CPO futures on the Indonesia Commodity and Derivative Exchange were 1.5% lower at IDR7,435 a kilogram at 1010 GMT.
Open interest on the BMD was 66,585 lots, versus 66,192 lots Monday. One lot is equivalent to 25 tons.
A total of 15,539 lots of CPO were traded versus 11,614 lots Monday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Sep'10 2,665 2,720 Down 55 2,686 2,660 Oct'10 2,590 2,615 Down 25 2,600 2,555 Nov'10 2,535 2,570 Down 35 2,555 2,506 Dec'10 2,524 2,562 Down 38 2,543 2,499
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
September 01, 2010 06:40 ET (10:40 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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