Crude Palm Oil Ends Down; Weak Cash Demand, Long Liquidation

Crude palm oil futures on Malaysia’s derivatives exchange ended lower Friday as demand eased in the cash market and amid speculative long liquidation, trade participants said.

The benchmark May contract on Bursa Malaysia Derivatives ended MYR11 lower at MYR2,649 a metric ton, after trading in a MYR2,620-MYR2,650/ton range.

While fundamentals are tight, prices "are due for a correction after a sharp rise in the last few trading sessions," said a Malaysia-based exporter.

"Once the liquidation is over, the market may find support from tightness in the cash market and rebound in the next trading session," a senior trading executive from Kuala Lumpur-based brokerage said.

Traders will be focusing on the supply tightness potential in Malaysia as February output fell 12.5% on month to 1.16 million tons, the lowest since last February, according to data from the government-linked Malaysian Palm Oil Board on March 10.

A likely rise in exports in March may further ease palm oil inventories this month, an analyst from Singapore said.

Trade participants said March 1-15 palm oil exports will likely rise 9%-17% compared with a month ago to around 660,000 tons.

Cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. put Feb. 1-15 exports at 565,114-607,660 tons.

Both surveyors are likely to issue export estimates Monday.

In the cash market, palm olein for April was traded at $822.50/ton and July/August/September at $807.50/ton and $810/ton, said a Singapore-based trading executive.

Cash CPO for prompt shipment was offered MYR30 lower at MYR2,670/ton.

Open interest on the BMD was 82,037 lots Friday, up from 81,554 lots Thursday. One lot is equivalent to 25 tons.

A total of 17,096 lots of CPO were traded versus 17,096 lots Wednesday.

Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT:

Month      Close    Previous   Change    High    Low
Mar 2010   2,670    2,692      Down 22   2,663   2,660
Apr 2010   2,660    2,672      Down 12   2,661   2,634
May 2010   2,649    2,660      Down 11   2,650   2,620
Jun 2010   2,631    2,642      Down 11   2,632   2,601

-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com

(END) Dow Jones Newswires

March 12, 2010 06:01 ET (11:01 GMT)