DJ Asian Crude Palm Oil Ends Up On Short Covering; Exports Rise

KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange ended up slightly Thursday as short covering and expectations of higher exports offset bearish cues from crude oil and sluggish cash market trade, pushing prices to close near intraday highs.

The benchmark September contract on the Bursa Malaysia Derivatives exchange ended MYR6 higher at MYR2,390 a metric ton, after moving in a range of MYR2,379-MYR2,393/ton.

Malaysia's June 1-25 palm oil exports will likely to be up around 7%-12% from the first 25 days of May to around 1.12 million-1.15 million tons, traders say.

"June exports could end a tad higher on month, as demand is seen rising gradually," a Malaysia-based exporter said.

Cargo surveyors Intertek Agri Services estimated exports at 1.03 million tons during the May 1-25 period, while SGS (Malaysia) Bhd. put the figure at 1.05 million tons for the same period last month. Both surveyors are likely to issue June 1-25 estimates on Friday.

Despite the hopes for rising exports, many trade participants expect rising palm inventory levels in Southeast Asia and the narrow price gap between palm and soyoil will cap any gains.

"I expect the gap in palm and soyoil prices to remain pretty tight," said John Baker, Rabobank International's regional head in Asia for Food and Agribusiness Research and Advisory. "A moderate and steady decline in prices is likely as palm output usually rises towards the end of the year."

The decline in the differential between soyoil and palm oil prices to around $20/ton from $100/ton late last year will push price-sensitive buyers to buy more soyoil, traders said.

In the cash market, palm olein for at $797.50/ton for July shipment, $782.50/ton for August and 772.50/ton for September, free-on-board Malaysian ports, a Singapore-based broker said.

No trades of CME Group Inc.'s dollar-based CPO futures contract were reported as of 1020 GMT.

Rupiah-denominated August CPO futures on the Indonesia Commodity and Derivative Exchange ended 0.4% lower at IDR6,395 a kilogram, with three lots traded. One lot is equivalent to 10 tons. The September contract was trading marginally lower at IDR6,280/kg with 232 lots done.

Open interest on the BMD was at 75,560 lots, versus 76,705 lots Wednesday. One lot is equivalent to 25 tons.

A total of 12,431 lots of CPO were traded Thursday versus 13,938 lots.

Closing BMD CPO futures prices in MYR/ton at 1000 GMT: 
 
Month   Close  Previous  Change   High    Low 
Jul'10  2,457     2,452  Up  05  2,458  2,449 
Aug'10  2,413     2,409  Up  04  2,418  2,406 
Sep'10  2,390     2,384  Up  06  2,393  2,379 
Oct'10  2,380     2,375  Up  05  2,380  2,368 
 
 
  -By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233;
shie-lynn.lim@dowjones.com