Crude palm oil futures on Malaysia’s derivatives exchange rose by as much as 1.0% Wednesday, erasing previous losses as investors covered their shorts on tight palm oil supply in Malaysia, trade participants and analysts said.
The benchmark May CPO contract on the Bursa Malaysia Derivatives ended MYR23 or 0.9% higher at MYR2,635 a metric ton after moving in MYR2,618-MYR2,639/ton range.
“The impact (on oil palms) from the dry spell during the July-September period last year may have magnified the drop in palm oil output,” said James Ratnam, senior research analyst at Kuala Lumpur-based brokerage TA Securities.
A prolonged dry spell lasting two successive months would normally have a six-seven-month delayed impact on oil palm production.
Palm oil output in Malaysia and Indonesia has been tapering off as plantations go into a low-output cycle. The impact of last year’s dry spell may lead to a sharp drop in output in February-March period, said a company executive from Malaysia-based major plantation firm.
Output may have dropped by around 15% in February compared with January, he said.
Lower palm oil output may have also reduced palm oil inventories from 2.0 million tons as at end-January to around 1.92 million tons in February.
Given an oil palm “replanting program that started end-2008, this palm oil output isn’t likely to be much higher than 2009′s 17.6 million tons,” TA’s Ratnam said.
In the cash market, RBD palm olein for April/May/June was traded at $807.50/ton, $810/ton and July/August/September at $800/ton, a Singapore-based broker said.
Open interest on the BMD was 80,375 lots Wednesday, down from 82,710 lots Tuesday. One lot is equivalent to 25 tons.
Some 9,242 lots of CPO were traded versus 11,872 lots Tuesday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Mar 2010 2,644 2,621 Up 23 2,645 2,635 Apr 2010 2,643 2,619 Up 24 2,646 2,628 May 2010 2,635 2,612 Up 23 2,639 2,618 Jun 2010 2,620 2,597 Up 23 2,626 2,606
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
March 03, 2010 07:03 ET (12:03 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
- 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
- CPO Rises To Two Week High; Industry Data In Focus
