Crude palm oil futures on Malaysia’s derivatives exchange ended higher Monday despite a drop in palm oil exports last month as strong gains in metals and crude oil boosted sentiment, trade participants said.
The benchmark May CPO contract on the Bursa Malaysia Derivatives ended MYR35, or 1%, higher at MYR2,630 after rising to a one-week high at MYR2,638/ton.
Palm oil prices were also supported by a weaker dollar, trade participants said.
Light, sweet crude oil on the New York Mercantile Exchange rose as much as 96 cents to $80.62 a barrel during Asian trading hours.
May soyoil on the Chicago Board of Trade was trading up 21 points at 39.91 cents a pound towards the end of trade on BMD.
In the next few trading sessions, however, palm oil prices may have limited upside due to a narrowing discount to soyoil prices and a record South American soybean harvest, a Kuala Lumpur-based broker said.
Cargo surveyor Intertek Agri Services reported Monday that Malaysia’s palm oil exports declined 19% to around 1.21 million in February, while SGS (Malaysia) Bhd. estimated a drop of 16% to 1.25 million tons.
Major palm oil buyers including India and China cut purchases. Intertek data showed exports to the Indian subcontinent were down 26% on month to 261,105 tons. SGS data showed that exports to India and Pakistan declined 24% to 105,025 tons and 33% to 126,570 tons, respectively, while shipments to China fell around 19% to 340,315 tons.
Separately, Indonesian Trade Minister Mari Pangestu said CPO prices may average around $700-$750/ton, or around MYR2,300-MYR2,500/ton, this year with support from a growing appetite for the versatile commodity, which is used in the manufacture of food and cosmetics and as feedstock for biodiesel.
The government will “continue to monitor and scrutinize environmental trade policy measures (of the E.U.) that may impede palm oil trade,” she said.
Under a Renewable Energy Directive, the E.U. has developed regulations that may restrict the entry of biofuels, including the import of palm oil as a biofuel feedstock, that might be challenged by Malaysian and Indonesia under World Trade Organization rules.
In the cash market, palm olein for July/August/September traded at $795/ton and October/November/December at $800/ton, a Singapore-based trading executive said.
Cash CPO for prompt shipment was offered MYR45 higher at MYR2,650/ton.
Open interest on the BMD was 82,428 lots Monday, down from 82,981 lots Thursday. One lot is equivalent to 25 tons. The market was closed for a public holiday on Friday.
Some 15,974 lots of CPO were traded versus 17,856 lots Thursday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT:
Month Close Previous Change High Low
Mar 2010 2,639 2,595 Up 44 2,640 2,595
Apr 2010 2,637 2,590 Up 47 2,642 2,622
May 2010 2,630 2,595 Up 35 2,638 2,617
Jun 2010 2,617 2,579 Up 38 2,626 2,607
(END) Dow Jones Newswires
March 01, 2010 06:05 ET (11:05 GMT)