Saturday, June 5, 2010

Asian Crude Palm Oil Ends Up On Crude Oil, Weaker Ringgit

Crude palm oil futures on Malaysia’s derivatives exchange ended up Friday, rebounding from losses in the previous session as a recovery in crude oil and weakness in the ringgit prompted investors to cover short positions, trade participants said.

The benchmark August contract on the Bursa Malaysia Derivatives ended MYR18 higher at MYR2,474 a metric ton after moving in a range of MYR2,455-MYR2,481/ton.

The dollar rose to MYR3.2720 from yesterday’s close of MYR3.2700, making CPO less expensive for palm oil refiners, who use the oil as feedstock.

“Crude’s rise above $75 a barrel and the rebound in soyoil gave palm prices a leg-up in the late trading session,” said a senior trading executive based in Singapore.
July soyoil on the Chicago Board of Trade was trading 5 points higher at 37.71 cents a pound at the end of trading on the BMD.

July crude oil on the New York Mercantile Exchange rose as much as 81 cents or 1.1% to $75.42 a barrel on Globex. At 0946 GMT, the July contract was up 54 cents at $75.15 a barrel.

Palm prices rose 1.6% this week, but many among traders said the trend wasn’t sustainable due to a likely rise in end-May palm oil inventory levels, as CPO output in Malaysia likely rose around 10% last month.
The rise in palm prices also narrowed the spread to prices of soyoil, resulting in a loss of market share as buyers stepped up purchases of the rival product, which is offered at par or slightly lower prices than palm oil at Brazilian and Argentinian ports, a trading executive at a Kuala Lumpur-based brokerage firm said.
Demand in the physical market “hasn’t been exciting and palm-soyoil’s narrow spread has prevented significant gains in CPO prices the past few months,” he said.

Cash palm olein used to be offered at a wide discount to soyoil of more than $100/ton, but now trades at par or at a slight premium.

Traders expect palm prices to move between MYR2,440 and MYR2,480/ton next week. A weak demand outlook and likely bearish production and inventory data from the Malaysian Palm Oil Board will cap gains.
The government-run Malaysian Palm Oil Board will issue production, exports and month-end palm oil stocks data for May on June 10.

CME’s Group Inc.’s (CME) dollar-based CPO futures for September were trading $5.25 higher at $744.75/ton with 9 lots traded. One lot equals 25 tons.

August rupiah-denominated CPO futures on the Indonesia Commodity and Derivative Exchange ended 0.8% higher at IDR6,835 a kilogram with 84 lots traded. One lot is equivalent to 10 tons. The September contract ended 0.7% higher at IDR6,755/kg with 132 lots done.

In the cash market, palm olein for June shipment was offered unchanged at $805/ton. Cash CPO for prompt shipment also offered unchanged at MYR2,570/ton.

Open interest on the BMD was 69,501 lots, versus 69,525 lots Thursday. One lot is equivalent to 25 tons.
A total of 10,117 lots of CPO were traded versus 9,631 lots Thursday.

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

Month   Close  Previous  Change   High    Low
Jun'10  2,560     2,538  Up  22   2,562   2,555
Jul'10  2,515     2,492  Up  23   2,521   2,495
Aug'10  2,474     2,456  Up  18   2,481   2,455
Sep'10  2,448     2,429  Up  19   2,455   2,431 
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233;

(END) Dow Jones Newswires

June 04, 2010 06:38 ET (10:38 GMT)

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