Wednesday, February 17, 2010

Crude Palm Oil Ends Up On Higher-Than-Expected Exports

Crude palm oil futures on Malaysia’s derivatives exchange ended higher Wednesday on the back of higher-than-expected exports and higher crude oil futures, said trade participants.

The benchmark May CPO contract on the Bursa Malaysia Derivatives ended MYR48 higher at MYR2,628 a metric ton, after trading in a MYR2,606-MYR2,628/ton range.

Cargo surveyor SGS (Malaysia) Bhd. estimated that Malaysia's palm oil exports in the Feb. 1-15 period fell 5.5% from a month earlier to 607,660 tons.

However, the estimates were higher than market expectations of around 570,000 tons.

Another cargo surveyor, Intertek Agri Services, Tuesday estimated the figure at 565,114 tons, a decrease of 16% on month.

"The market is expecting exports to fall from mid-February and through to March. But production is also expected to fall, probably by around 10%, so the impact of lower exports would be minimal especially if the fall is within expectations," said a Singapore-based trader.

Another Singapore-based trader said the SGS estimates were surprising as exports didn't fall as much as expected and supported CPO prices in a market lacking fresh local cues.

The lack of fresh local cues due to the closure of several Asian markets for the Lunar New Year holiday prompted sluggish, rangebound trade for most of the day.

"Trading activity might pick up only next week when Chinese buyers re-enter the market," said a Kuala Lumpur-based trader.

Higher crude oil futures during Asian trading hours also supported CPO prices. At the end of trade on the BMD, crude oil futures on the New York Mercantile Exchange were up $0.26 at $75.94 a barrel.

In the cash market, palm olein for April/May/June traded at $800/ton, said a Singapore-based trader.

Cash CPO for prompt shipment was offered MYR60 higher at MYR2,650/ton.

Open interest on the BMD was 79,210 lots last trade Friday, up from 78,551 lots. One lot is equivalent to 25 tons.

Some 14,161 lots of CPO were traded versus 8,789 lots Friday.

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