DJ Asian Crude Palm Oil Ends Up; Weather Threats, Supply Outlook

KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange ended higher Monday, with investors ignoring slowing export growth, focusing instead on possible production weakness due to La Nina-related heavy rainfall.

Growers and analysts said the rainfall may stifle palm oil output in Malaysia and Indonesia, the top two producers, crimping supply growth.

Lower yields in the states of Sabah and Sarawak have prompted trade participants and growers to cut forecasts for supply growth this month to 5% from a previous projection of 10%.

The benchmark October contract on the Bursa Malaysia Derivatives ended MYR5 higher at MYR2,454 a metric ton, after trading on both sides.

The market was in negative territory for most of the day as "the surge in prices in previous trading sessions tempted investors to lock in gains," a senior executive at global trading company said.

"Prices may trade lower this week with the imminent slowdown in exports, as the bulk of festive demand shipments has already been shipped out in early July."

Some trade participants said July 1-20 palm shipments likely declined 3%-4% on month to around 877,000 tons, which will likely prevent prices rising further.

Cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. are due to issue their July 1-20 estimates Tuesday.

In the cash market, palm olein for October/November/December shipment was traded at $782.50/ton and $790/ton, free on board Malaysian ports, a Singapore-based trading executive said.

Cash CPO for prompt delivery was offered MYR10 higher at MYR2,520/ton.

CME Group Inc.'s dollar-based CPO futures for October delivery weren't traded during Asian hours.

Rupiah-denominated September CPO futures on the Indonesia Commodity and Derivative Exchange were trading 1.5% lower at IDR6,565 a kilogram at 0949 GMT, with 11 lots changing hands. One lot equals 10 tons.

Open interest on the BMD was 68,762 lots compared with 69,473 lots Friday. One lot is equivalent to 25 tons.

A total of 13,739 lots of CPO were traded versus 26,327 lots Friday.

Closing BMD CPO futures prices in MYR/ton at 1000 GMT: 
 
Month   Close  Previous  Change   High    Low 
Aug'10  2,504     2,493  Up  11  2,504  2,478 
Sep'10  2,474     2,470  Up   4  2,474  2,448 
Oct'10  2,454     2,449  Up   5  2,455  2,429 
Nov'10  2,449     2,445  Up   4  2,450  2,426 
 
 
  By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233;
shie-lynn.lim@dowjones.com