Tuesday, June 1, 2010

DJ Asian Crude Palm Oil Ends Up On Speculative Buying, Short Covering

KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange rose 1% Tuesday on speculative buying and short covering in late trade despite a fall in soyoil and crude prices, with investors hoping festive demand in the coming months ahead of Ramadan may boost exports.

The benchmark August contract on the Bursa Malaysia Derivatives exchange ended MYR24 or 1% higher at an intraday high of MYR2,460 a metric ton.

The ringgit's slide against the dollar also gave some support to prices, an analyst in Kuala Lumpur said. The dollar rose to MYR3.3030, from MYR3.2550 Monday.

Trade participants said export shipments are gradually gaining momentum ahead of Ramadan, the Islamic month of fasting. This may support the market, said a Singapore-based trading executive.

But some traders said palm's export growth hinges on the differential with soyoil.

Since last year, palm has lost market share due to a diminishing differential to soyoil as prices were supported by a weak outlook for palm output this year even as the strong soybean crop in South America weighed on prices.

Crude soyoil for June shipment, free on board Argentinian ports was offered at $790/ton compared with palm olein for June offered at $800/ton, FOB Malaysian ports, said a Singapore-based cash market broker.

Soyoil and crude oil were trading mostly in negative territory during Asian trading hours, weighing on CPO for most parts of the trading session.

July soyoil on the Chicago Board of Trade was trading 13 points lower at 37.48 cents a pound by the end of trade on the BMD.

At 1014 GMT, crude oil on the New York Mercantile Exchange was trading $2.02 lower at $71.95 a barrel on Globex.

In the cash market, palm olein for July shipment was traded at $787.50/ton, October/November/December shipment at $772.50, $773.50 fob Malaysian ports, said another Singapore-based trading executive.

Cash CPO for prompt shipment was offered MYR10 higher at MYR2,560/ton.

Meanwhile, no trades were reported on CME's Group Inc.'s (CME) dollar-based CPO futures for the September contract.

The benchmark August rupiah-denominated CPO futures on the Indonesia Commodity and Derivative Exchange ended 0.7% higher at IDR6,760 a kilogram, with 102 lots traded. One lot is equivalent to 10 tons. The September contract ended 0.1% higher at IDR6,685/kg, with 140 lots done.

Open interest on the BMD was 68,982 lots, versus 70,020 lots Monday. One lot is equivalent to 25 tons.

A total of 10,109 lots of CPO were traded versus 9,540 lots Monday.

Closing BMD CPO futures prices in MYR/ton at 1000 GMT: 
Month   Close  Previous  Change   High    Low 
Jun'10  2,536     2,499  Up  37   2,536   2,515 
Jul'10  2,509     2,475  Up  34   2,509   2,474 
Aug'10  2,460     2,436  Up  24   2,460   2,430 
Sep'10  2,432     2,401  Up  31   2,432   2,403 
  -By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233;

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