Crude Palm Oil Ends Marginally Lower In Choppy Trade

Crude palm oil futures on Malaysia’s derivatives exchange ended marginally lower in volatile trade Tuesday amid both long liquidation and fresh buying.

Refined, bleached and deodorized palm olein’s narrowing discount to crude soyoil futures and bearish cues from crude oil weighed on CPO futures, trade participants said.

The new benchmark June contract on Bursa Malaysia Derivatives ended MYR6 lower at MYR2,569 a metric ton, after falling as much as 1.1% to a one-month low of MYR2,546/ton.

Prices swung between positive and negative territory in the morning session as some investors liquidated positions (only) to buy again,” a Malaysia-based exporter said.

There were concerns China may tighten its monetary policy to quell inflation, and a “rate hike could potentially be a dampener (for CPO futures),” said Carey Wong, a senior analyst at Singapore-based OCBC Research.

“The earlier concerns (about) a drier-than-usual period in the first half have also been eased somewhat by the early arrival of rains…adding to the bearish sentiment in the market,” Wong said.

Unlike many vegetable oil crops that are irrigated, palm oil is rain-fed and is highly dependent on weather conditions.

Adding to the volatility, some investors squared off positions ahead of key data from the U.S., including the results of a Federal Open Market Committee meeting on interest rates, many traders said. The outcome may have an impact on the dollar, which in turn will affect prices of most commodities, including palm oil.

In the cash market, palm olein for July/August/September traded at $792.50/ton and $795/ton, an executive from Singapore-based commodities brokerage said.

Cash CPO for prompt shipment was offered MYR25 lower at MYR2,605/ton.

Open interest on the BMD was 82,648 lots Tuesday, up from 81,748 lots Monday. One lot is equivalent to 25 tons.

A total of 20,774 lots of CPO were traded versus 22,165 lots Monday.

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

Month      Close    Previous   Change    High    Low
Apr 2010   2,605    2,609      Down 04   2,618   2,585
May 2010   2,586    2,590      Down 04   2,602   2,562
Jun 2010   2,569    2,575      Down 06   2,586   2,546
Jul 2010   2,553    2,559      Down 06   2,575   2,535

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

(END) Dow Jones Newswires

March 16, 2010 06:57 ET (10:57 GMT)