DJ Asian Crude Palm Oil Ends Down; MYR2,550 Key Support Breached

JAKARTA (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange ended lower Friday, breaching a key support level as participants squared off positions ahead of the weekend, said traders. The benchmark June contract on the Bursa Malaysia Derivatives exchange ended MYR41 lower at the intraday low of MYR2,534 a metric ton, after trading in a range of MYR2,534-MYR2,565. Trade was thin and sluggish for most of the day, but downward momentum built up after prices breached the crucial MYR2,550 support level, said traders. "Breaching the MYR2,550 level means prices will likely trade downwards to MYR2,500, rather than aim to break the MYR2,600 resistance," said a Kuala Lumpur-based trader. CPO prices have been constantly testing the MYR2,550 support and MYR2,600 this week, but prices barely breached either levels until today. "There is a bit of bearish sentiment that is weighing on prices. Exports are higher on month, but that's to be expected, as February was a short month compared with March. Production is rising, however, and that's prompting fears of rising stock levels," said another Kuala Lumpur-based trader. Cash market prices for forward months like July, August and September are trading at a discount to nearer months, likely indicative that stocks are tipped to rise in the next few months, said a Singapore-based trader. In the cash market, palm olein for July/August/September traded at $792.50/ton, said an executive from a Singapore-based commodities brokerage. Cash CPO for prompt shipment was offered MYR30 lower at MYR2,610/ton. Open interest on the BMD was 78,501 lots, up from 78,414 lots Thursday. One lot is equivalent to 25 tons. A total of 14,711 lots of CPO were traded versus 10,656 lots Thursday.

Closing BMD CPO futures prices in MYR/ton at 1000 GMT: 
 
Month      Close    Previous   Change    High    Low 
Apr 2010   2,599    2,634      Dn 35     2,626   2,595 
May 2010   2,565    2,599      Dn 34     2,590   2,562 
Jun 2010   2,534    2,575      Dn 41     2,565   2,534 
Jul 2010   2,521    2,558      Dn 37     2,545   2,521 
 
-By Fawziah Selamat, Dow Jones Newswires; +62 21 3983 1277;
fawziah.selamat@dowjones.com