Crude palm oil futures on Malaysia’s derivatives exchange ended higher Friday on spillover buying interest from soyoil and a bullish price forecast, trade participants said.
The benchmark November contract on the Bursa Malaysia Derivatives exchange ended MYR13 higher at MYR2,543 a metric ton after moving in a MYR2,527-MYR2,557 range.
Prices rose in early trade after a bullish forecast by London-based vegetable oils analyst Dorab Mistry late Thursday, but a lack of buying interest in the cash market kept the CPO price rally in check.
CPO must rise to around MYR3,000 ($955) a ton to curtail demand for exports, as bouts of bad weather have limited palm production growth in Indonesia and Malaysia, the world's top palm oil producers, Mistry said at a conference in Brazil.
Mistry also maintained his forecast for Malaysian crude palm oil output this year, saying that an El Nino-related dry spell late last year will likely cut production by 2.3% to around 17.2 million tons, as the two-month dry spell caused tree stress and lowered crop yields.
"CPO production during the Ramadan period (four weeks to early September) will be flat to lower, and recovery will have to wait until October," he said.
In Indonesia, yield-sapping, abnormal weather patterns may lower output by 10%-15% this year, to around 18 million-19 million tons, Indonesian Palm Oil Association Executive Director Fadhil Hasan said. Indonesia's palm production reached 20.6 million tons in 2009.
However, a Kuala Lumpur-based trading executive said palm prices may ease from current levels next week, pressured by waning export demand and rising inventory levels as production increases.
In the cash market, palm olein for September was offered $10 higher at $930/ton. Cash CPO for prompt shipment was offered MYR20 higher at MYR2,720/ton.
CME Group Inc.'s dollar-based November CPO futures were trading at $811.25/ton at 0922 GMT, up $7.50 from Thursday's close.
Rupiah-denominated October CPO futures on the Indonesia Commodity and Derivative Exchange were 1.0% higher at IDR7,480 a kilogram at 0921 GMT.
Open interest on the BMD was 68,853 lots, versus 68,428 lots Thursday. One lot is equivalent to 25 tons.
A total of 12,062 lots of CPO were traded versus 17,790 lots Thursday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Sep'10 2,688 2,668 20 2,688 2,676 Oct'10 2,600 2,573 27 2,610 2,592 Nov'10 2,543 2,530 13 2,557 2,527 Dec'10 2,525 2,513 12 2,541 2,524
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
August 27, 2010 06:15 ET (10:15 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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