Crude Palm Oil Ends Down;Exports Likely Down, Output Up

Crude palm oil futures on Malaysia’s derivatives exchange ended lower Wednesday on concerns over disappointing exports amid rising production, said trade participants.

The benchmark June contract on the Bursa Malaysia Derivatives exchange ended MYR31 lower at MYR2,560 a metric ton after trading in the MYR2,549-MYR2,595 range.

Traders said they expect Malaysia’s March 1-25 exports to be flat on month at 1.1 million tons.
During the same period in February, cargo surveyor Intertek Agri Services estimated exports at 1.1 million tons. Another cargo surveyor, SGS (Malaysia) Bhd., also provided a similar estimate.

With exports not on the increase, there are fears that end-March stock levels will rise, especially as production is tipped to grow by 5%-10% in March, said a Singapore-based trader.

Such a scenario would weigh on CPO prices, prompting them to trade downwards to MYR2,500-MYR2,550 in the next few days, said some traders.

In recent days, CPO prices have see-sawed between MYR2,550 and MYR2,600.

The export data is expected to be released Thursday. If exports fall below 1.1 million tons for March 1-25, immediate support at MYR2,550 will likely be broken, said traders.

Lower crude oil and soyoil prices also weighed on CPO prices.

By the end of trade on the BMD, May soyoil on the electronic Chicago Board of Trade was down 21 points at 39.33 cents a pound.

May Brent crude oil on London’s ICE futures fell $1.34 to $79.36 a barrel.

In the cash market, palm olein for July/August/September traded at $795/ton, said an executive from a Singapore-based commodities brokerage.

Cash CPO for prompt shipment was offered MYR40 lower at MYR2,610/ton.

Open interest on the BMD was 77,953 lots Wednesday, down from 78,158 lots Tuesday. One lot is equivalent to 25 tons.

A total of 13,662 lots of CPO were traded versus 11,742 lots Tuesday.

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

Month      Close    Previous   Change    High    Low
Apr 2010   2,612    2,644      Dn 32     2,642   2,605
May 2010   2,577    2,610      Dn 33     2,611   2,567
Jun 2010   2,560    2,591      Dn 31     2,595   2,549
Jul 2010   2,546    2,580      Dn 34     2,576   2,535 

-By Fawziah Selamat, Dow Jones Newswires; +62 21 3983 1277; fawziah.selamat@dowjones.com

(END) Dow Jones Newswires

March 24, 2010 06:47 ET (10:47 GMT)