Crude palm oil futures on Malaysia's derivatives exchange ended lower Wednesday as investors liquidated long positions in anticipation of likely lower palm oil exports during the Feb. 1-25 period.
Prices fell below the MYR2,600 a metric ton psychological level toward the end of trade on the BMD as investors fear demand may decline further due to a narrowing price gap between palm oil and its rival soyoil, said trade participants.
The benchmark May CPO contract on the Bursa Malaysia Derivatives fell MYR45 or 1.7% to end at an intraday low of MYR2,590/ton.
The price gap between palm oil, used in the manufacture of food products and as feedstock for biodiesel, and soyoil, a substitute, has narrowed to $40/ton from $100/ton in December last year, said an executive from a Singapore-based trading firm.
Prices may ease further in the next trading session to MYR2,550/ton if crude oil extends its decline, he said.
The benchmark Nymex April light, sweet crude contract was trading 47 cents lower at $78.39 a barrel at 1000 GMT.
Trade participants said palm oil exports may have declined 11%-15% on month to around 1.03 million to 1.08 million tons for the Feb. 1-25 period. Cargo surveyors put palm oil shipments at 1.21 million tons for the same period in January.
Cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. are expected to issue export data Thursday.
"Cargo movements out of the country have been a tad slow this month due to the shorter trading month and Lunar New Year holidays. Exports for the whole month (of February) are likely to be 10%-16% lower," said a Malaysia-based shipping executive.
In the cash market, palm olein for March shipment traded at $802.50/ton and April/May/June at $802.50/ton, said a Singapore-based trading executive.
Cash CPO for prompt shipment was offered MYR50 lower at MYR2,610/ton.
Open interest on the BMD was 83,180 lots Wednesday, up from 82,196 lots Tuesday. One lot is equivalent to 25 tons.
Some 11,714 lots of CPO were traded versus 15,847 lots Tuesday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Mar 2010 2,600 2,656 Down 56 2,640 2,600 Apr 2010 2,590 2,644 Down 54 2,639 2,590 May 2010 2,590 2,635 Down 45 2,636 2,590 Jun 2010 2,580 2,627 Down 47 2,622 2,580
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
February 24, 2010 06:22 ET (11:22 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.
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