Tuesday, July 13, 2010

Crude Palm Oil Ends Up 1.7%; Inventories Down, Output Slower

Crude palm oil futures on Malaysia's derivatives exchange ended higher Monday, as fresh buying was prompted by a fall in palm inventories to a nine-month low due to slower output growth, trade participants said.

The benchmark September contract on the Bursa Malaysia Derivatives ended MYR38 or 1.7% higher at MYR2,338 a metric ton. The contract never fell below the previous close during the session. Traders put immediate resistance for the benchmark at MYR2,350/ton.

The Malaysian Palm Oil Board surprised investors with their issuance Monday of data on exports, production and end-month inventories in June.

"Investors weren't expecting stocks to fall. This (MPOB data) lifted sentiment and induced buying interest during the afternoon session," a Kuala Lumpur-based trading executive said.

MPOB estimated palm oil inventories at 1.45 million tons, down 7.1% from end-May, compared with market expectations of an increase to around 1.59 million tons.

Palm oil output rose only 2.5% in June to 1.42 million tons, below market expectations of a 5%-10% rise.

Cargo surveyor Intertek Agri Services Saturday estimated Malaysia's palm oil exports during the July 1-10 period up 9% at 474,928 tons.

Another surveyor, SGS (Malaysia) Bhd., estimated the exports in the same period at 460,343 tons. Palm shipments to Pakistan, a major edible oils consumer, reached 93,750 tons, up more than five-fold from the same period in May, data from SGS showed.

Intertek data showed a two-fold increase in shipments to the Middle East at 38,490 tons for the July 1-10 period, from 18,800 tons in June.

Investors were also tracking the progress of monsoon rains in India, as any prolonged delay could hurt crop production and push up vegetable oil prices.

In the cash market, palm olein for August shipment was offered $10 higher at $795/ton.

Cash CPO for prompt delivery was offered MYR10 higher at MYR2,440/ton.

CME Group Inc.'s dollar-based September CPO futures contract for September was up $8.00 from its U.S. close at $724/ton.

Rupiah-denominated September CPO futures on the Indonesia Commodity and Derivative Exchange were 2.9% higher at IDR6,300 a kilogram at 0925 GMT, with four lots done.

The October contract was trading 0.4% higher at IDR6,295/kg with 80 lots changing hands. One lot is equivalent to 10 tons.

Open interest on the BMD was 73,512 lots, versus 72,569 lots Friday. One lot is equivalent to 25 tons.

A total of 15,227 lots of CPO were traded versus 16,138 lots Friday.

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

Month   Close  Previous  Change   High    Low
Jul'10  2,440     2,430  Up  10  2,449  2,435
Aug'10  2,384     2,344  Up  40  2,385  2,356
Sep'10  2,338     2,300  Up  38  2,341  2,310
Oct'10  2,321     2,287  Up  34  2,322  2,295 
By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233;  shie-lynn.lim@dowjones.com

(END) Dow Jones Newswires
July 12, 2010 06:37 ET (10:37 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc

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