Crude palm oil futures on Malaysia’s derivatives exchange ended little changed in choppy trade Wednesday as soyoil futures supported the rise in prices, but not enough to propel the market higher amid concerns that demand is waning.
The benchmark October contract on the Bursa Malaysia Derivatives ended MYR7 higher at MYR2,677 a metric ton, holding above the psychological MYR2,650/ton level after trading both sides.
Soyoil futures on the Chicago Board of Trade were trading 5 points higher at 42.28 cents/pound by the end of trade on BMD, lending support to CPO amid broadly bearish fundamentals.
Traders said limited availability of oil in the cash market for nearby months supported prices, but few trades were reported, capping the gains.
"The vessel lineup at ports isn't strong and the market is concerned that exports would slow down and lead to a possible buildup in inventory levels," a Kuala Lumpur-based exporter of vegetable oils said.
Weak fundamentals, with a fall in exports and rising supply, also pressured prices.
Independent cargo surveyors Tuesday estimated Aug. 1-10 exports fell between 14% and 17% from the same period in July.
Still, market bulls said production figures could yet disappoint this month and next.
Normally a high-productivity season, output may fall as the yield-sapping effects of dry conditions associated with the El Nino weather event earlier this year could affect palm fruits.
"There will also be fewer harvesting rounds during the fasting month and in September, when Muslims celebrate the Eid," said a company executive at a plantation company based in Sabah. Muslims normally take a week-long vacation at Eid al Fitr, the culmination of the Ramadan fasting month.
Traders expect prices to stay in a relatively narrow MYR2,620/ton-MYR2,710/ton next session ahead of key U.S. Department of Agriculture supply and demand data due Thursday.
In the cash market, palm olein for September delivery traded at $922.50/ton, October/November/December at $875/ton and $882.50/ton, and January/February/March traded at $875/ton, free on board Malaysian ports, a trader in Singapore said.
Cash CPO for prompt shipment was offered MYR20 higher at MYR2,800/ton.
CME Group Inc.'s dollar-based October CPO futures were trading $1.50 lower at $848/ton at 1002 GMT, compared with Tuesday's close of $849.50/ton.
Rupiah-denominated October CPO futures on the Indonesia Commodity and Derivative Exchange were 2.9% higher at IDR7,555 a kilogram.
Open interest on the BMD was 63,685 lots compared with 67,292 lots Tuesday. One lot is equivalent to 25 tons.
A total of 12,394 lots of CPO were traded versus 18,007 lots Tuesday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Aug'10 2,816 2,790 Up 26 2,815 2,775 Sep'10 2,731 2,705 Up 26 2,735 2,695 Oct'10 2,677 2,670 Up 07 2,687 2,652 Nov'10 2,656 2,652 Up 04 2,668 2,635
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
August 11, 2010 06:51 ET (10:51 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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