Crude palm oil futures on Malaysia’s derivatives exchange ended higher Wednesday on fresh buying interest as investors tracked gains in soyoil and crude futures during Asian trade.
The benchmark October contract on the Bursa Malaysia Derivatives exchange ended MYR33 higher at MYR2,457 a metric ton after moving in a MYR2,434-MYR2,467 range.
"Expectations for demand to outpace production of CPO is also key factor in the rise in prices today," said a senior trading executive at Kuala Lumpur-based brokerage.
With little fresh news expected to move the market, CPO could hold within the recent trading range and act on external leads, she added.
At 1034 GMT, September crude oil on the New York Mercantile Exchange was trading 36 cents higher at $77.94 a barrel.
September soyoil on the Chicago Board of Trade was trading 1 point up at 38.59 cents a pound by the end of trade on BMD.
Goldman Sachs Group in a note said CPO's stock-to-usage ratio will decline in 2010-2011 as consumption growth expands faster than supply, which may support the rise in prices.
Analysts at the investment bank forecast cash CPO prices to gain 15%-20% this year as biological yield stress caused by dry weather earlier this year hurt production.
A 35% drop in palm oil inventory levels from its peak in December is "positive for CPO prices."
The investment bank said U.S. biodiesel demand may pick up in the second half this year and boost the prices of key feedstock including soyoil, supporting CPO as well.
In the cash market, palm olein for September was traded at $800/ton, free on board Malaysian ports, a Singapore-based trading executive said.
Cash CPO for prompt delivery was offered MYR20 higher at MYR2,530/ton.
CME Group Inc.'s dollar-based CPO futures weren't traded during Asian hours.
Rupiah-denominated October CPO futures on the Indonesia Commodity and Derivative Exchange were trading 1.1% higher at IDR6,630 a kilogram at 1008 GMT, with 199 lots changing hands. One lot equals 10 tons.
Open interest on the BMD was 68,667 lots, versus 67,704 lots Tuesday. One lot is equivalent to 25 tons.
A total of 16,473 lots of CPO were traded versus 17,134 lots Tuesday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Aug'10 2,522 2,503 Up 19 2,529 2,500 Sep'10 2,483 2,451 Up 32 2,490 2,460 Oct'10 2,457 2,424 Up 33 2,467 2,434 Nov'10 2,452 2,420 Up 32 2,460 2,430
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
July 21, 2010 06:52 ET (10:52 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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