Wednesday, March 31, 2010

DJ Asian Crude Palm Oil Ends Little Changed; Soyoil, Crude Support

KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange ended little changed Wednesday, supported by stronger soyoil and crude oil futures, said trade participants.

The benchmark June contract on the Bursa Malaysia Derivatives exchange ended MYR6 higher at MYR2,551 a metric ton after moving many times between positive and negative territory.

Soyoil futures during Asian trading hours rose as much as 38 points to 39.05 cents a pound, giving a boost to CPO prices, which rose to an intraday high of MYR2,561/ton.

Many trade participants also said market rumors of China curbing soyoil imports through tighter quality standard controls supported the rise in BMD CPO futures.

The Chinese government may require all imported soyoil to have a maximum solvent residue level of 100 parts a million and that cargoes exceeding the level not be allowed to be unloaded at ports.

May soyoil on the Chicago Board of Trade was trading 25 points higher at 38.92 cents/pound by the end of trade on the BMD.

Light, sweet crude oil for May delivery on the New York Mercantile Exchange was trading 52 cents higher at $82.89 a barrel on Globex at 1004 GMT.

The rise in Malaysia's palm oil exports gave little support to BMD, as "the figures are within expectations and have been factored into yesterday's gains," said a Kuala Lumpur-based trading executive.

Both cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. put exports at 1.35 million tons, up 7.7%-12% on month.

Palm oil exports were higher due to a rise in sales to China, India, Pakistan and the U.S., but the "numbers aren't impressive due to a decline in  European demand for the commodity, while palm's narrowing discount to soyoil may spur buyers to opt for rival soyoil," said a Malaysia-based exporter.

Shipments to Europe fell 33% on month to 157,793 tons, according to data from SGS, while Intertek estimated exports to Europe at 204,621 tons, down 12% on month.

"Market sentiment is a tad cautious today, moving in a narrow price range ahead of the U.S. Department of Agriculture's report to be released later tonight. The other prevailing factor that kept prices in a narrow range is the extent of a rise in cargoes from Indonesia," said an analyst in Singapore.

Malaysia's palm oil imports from Indonesia may rise to around 70,000-80,000 tons in March as Indonesian trading and refining companies may have rushed to ship as much oil to avoid a higher export tax from April, said shipping executives and analysts.

Higher palm oil imports may lead to higher palm inventories and may weigh on palm oil prices.

In the cash market, palm olein for April shipment was traded at $810/ton, said a Singapore-based broker, adding the bid-offer gap was around $10/ton.

Cash CPO for prompt delivery was offered MYR30 higher at MYR2,630/ton.

Open interest  on the BMD was 78,175 lots, up from 78,081 lots Tuesday.

One lot is equivalent to 25 tons. A total of 14,488 lots of CPO were traded versus 19,558 lots Tuesday.

Closing BMD CPO futures prices in MYR/ton at 1000 GMT: 
Month      Close    Previous   Change    High    Low 
Apr 2010   2,628    2,591      Up 37     2,628   2,585 
May 2010   2,570    2,563      Up 07     2,581   2,555 
Jun 2010   2,551    2,545      Up 06     2,561   2,529 
Jul 2010   2,536    2,515      Up 21     2,542   2,513 
  -By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; 

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