DJ Asian CPO Futures End Off Highs; MPOB Data Likely Bearish

KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange ended off highs Wednesday as crude traded lower and amid a likely rise in end-May palm oil inventory levels, prompting investors to take profit, trade participants said.

The benchmark August contract on Bursa Malaysia Derivatives ended MYR8 higher at MYR2,468 a metric ton.

Despite bearish market sentiment, prices were higher during afternoon trade, rising to an intraday high of MYR2,480/ton as speculative buying and higher soyoil during Asian trading hours lifted prices up.

Traders had expected a fall in futures prices after overnight declines in crude and soyoil market and since data from the government-linked Malaysian Palm Oil Board aren't likely to be price-friendly.

The MPOB is scheduled to issue Malaysia's May palm oil production, export and stock data June 10.

Traders estimate Malaysia's end-May palm oil inventories to be little changed to a tad higher, between 1.62 million tons and 1.65 million tons due to higher CPO supply.

Growers and traders estimated May palm oil output rose 10% on month. Cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. put May palm oil exports at 1.33 million tons and 1.32 million tons, respectively.

"Prices couldn't sustain at higher levels as palm oil demand has been tad a sluggish," said a senior trading executive from Kuala Lumpur.

Many among buyers are only making purchases to replenish supplies and no large deals have been reported in the market so far that could push prices higher, he said.

Purchases by buyers have been slow as palm olein, a key product used for food-making, is more expensive than soyoil in the cash market, a Singapore-based trading executive said.

July soyoil on the Chicago Board of Trade finished 9 points lower at 37.52 cents a pound on Tuesday.

At 1001 GMT, July soyoil was trading 21 points higher on e-CBOT at 37.73 cents a pound.

July crude oil on the New York Mercantile Exchange was trading 35 cents lower at $72.23 a barrel at 1001 GMT.

In the cash market, palm olein for June shipment offered at $800/ton while Cash CPO for prompt shipment was offered unchanged at MYR2,560/ton.

Meanwhile, no trades were reported on CME's Group Inc.'s (CME) dollar-based CPO futures for  September contract at 1007 GMT. The benchmark August rupiah-denominated CPO futures on the Indonesia Commodity and Derivative Exchange ended 0.2% lower at IDR6,750 a kilogram, with 151 lots traded. One lot is equivalent to 10 tons. The September contract ended 0.1% lower at IDR6,680/kg, with 122 lots done.

Open interest on the BMD was 68,662 lots, versus 68,982 lots Tuesday. One lot is equivalent to 25 tons.

A total of 15,499 lots of CPO were traded versus 10,109 lots Tuesday.

Closing BMD CPO futures prices in MYR/ton at 1000 GMT: 
 
Month   Close  Previous  Change   High    Low 
Jun'10  2,535     2,533  Up   02  2,551   2,530 
Jul'10  2,505     2,509  Down 04  2,521   2,496 
Aug'10  2,468     2,460  Up   08  2,480   2,458 
Sep'10  2,445     2,432  Up   13  2,457   2,432 
 
 
  -By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233;
shie-lynn.lim@dowjones.com