JAKARTA (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange ended higher Wednesday, tracking stronger soyoil futures in after-hours trade, but fears of rising production and sluggish exports kept a lid on the gains, trade participants said.
Soyoil's gains were the main factor keeping CPO in the black, and bearish fundamentals are likely to put prices under pressure for the rest of the week.
The new benchmark September contract on the Bursa Malaysia Derivatives ended MYR14 higher at MYR2,380 a metric ton, off its intraday high of MYR2,390.
Trade was thin as markets in Hong Kong, Taiwan and China are closed for a public holiday.
As trade ended on the BMD, Chicago Board of Trade July soyoil futures were up 17 points at 37.98 cents a pound in electronic trade.
Soyoil futures remained in positive territory during Asian trade, supporting CPO prices and reventing a dip into negative territory despite largely bearish market sentiment, with trade participants tipping prices to breach support at MYR2,360/ton and test MYR2,350/ton by the end of the week.
"Demand is likely going to continue to be weak as soyoil prices are either cheaper or around the same levels as palm oil's," said a Singapore-based trader. "This type of price scenario usually prompts buyers to switch to soyoil."
Soyoil usually traded at premiums of around $70/ton to $100/ton over palm oil until late last year.
Stocks in Malaysia will likely increase slightly at the end of this month from 1.56 million tons last month as production rises by 10% and exports decline, traders said.
In the cash market, palm olein for July delivery traded at $785/ton, on free-on-board basis from Malaysian ports, a Singapore-based broker said.
Cash CPO for prompt delivery was offered $30 lower at MYR2,500/ton.
Open interest on the BMD was 76,801 lots compared with 77,731 lots Tuesday. One lot is equal to 25 tons.
A total of 19,375 lots of CPO were traded on BMD versus 15,455 lots.
Closing BMD CPO futures prices in MYR/ton at 1000 GMT:
Month Close Previous Change High Low
Jul'10 2,464 2,439 Up 25 2,467 2,448
Aug'10 2,420 2,391 Up 29 2,423 2,395
Sep'10 2,380 2,366 Up 14 2,390 2,367
Oct'10 2,368 2,343 Up 25 2,370 2,352
-By Fawziah Selamat, Dow Jones Newswires; +62 21 3983 1277; firstname.lastname@example.org
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