KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange ended lower Friday as participants weighed palm's narrowing discount to rival soyoil against expected bullish price forecasts that may be released at a vegetable oils conference next week, trade participants said.
The benchmark May contract on the Bursa Malaysia Derivatives ended MYR4 lower at MYR2,670 a metric ton in choppy trade that saw prices swinging between positive and negative territories.
CPO futures rose to a two-month high of MYR2,700/ton toward midday trade, "fueled by the slew of positive news in the past few days ahead of the industry conference," said Govindlal Patel, managing partner at Mumbai-based edible oils importer Dipak Enterprise.
He said CPO prices may even rise to MYR2,800 if noted analyst like Dorab Mistry, James Fry and Thomas Mielke release bullish price forecasts next week.
Malaysia's CPO output in 2010 may only rise by 1.1% to 17.8 million tons, according to Mielke, which is below a government forecast of 18.1 million tons. Palm oil output for 2009 was at 17.6 million tons, based on recent data from government-linked Malaysian Palm Oil Board.
Such bullish news prompted a short uptrend in prices, trade participants said.
But palm's narrowing discount to soyoil may cap a sharp rise in prices, said a Kuala Lumpur-based senior trading executive. Palm and soyoil prices move in tandem as both compete for similar export destinations.
"The market turned volatile as investors squared off their positions ahead of next week's conference and key production, exports and stocks data from MPOB," he said.
In the cash market, palm olein for March was offered $2.50 higher at $820/ton, while April/May/June was offered $2.50 higher at $820/ton.
Cash CPO for prompt shipment was offered MYR5 lower at MYR2,680/ton.
Open interest on the BMD was 81,079 lots Friday, up from 80,556 lots Thursday. One lot is equivalent to 25 tons.
A total of 17,321 lots of CPO were traded versus 16,754 lots Thursday.
Closing BMD CPO futures prices in MYR/ton at 1000 GMT:
Month Close Previous Change High Low
Mar 2010 2,670 2,680 Down 10 2,697 2,670
Apr 2010 2,680 2,681 Down 01 2,705 2,677
May 2010 2,670 2,674 Down 04 2,700 2,665
Jun 2010 2,664 2,662 Up 02 2,683 2,650
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233;