Monday, July 5, 2010

DJ UPDATE: Asian Crude Palm Oil Ends Down On Bearish Fundamentals

By Shie-Lynn Lim


KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange fell 1.9% to a fresh eight-month low Monday due to concerns that China, a major vegetable oil consumer, may buy less palm oil amid an economic slowdown.

Prices also fell as rising palm supplies in the next few months may push inventory levels higher as export demand remained sluggish, trade participants said.

The benchmark September contract on the Bursa Malaysia Derivatives exchange ended MYR45 or 1.9% lower at MYR2,290 a metric ton after moving in a MYR2,290-MYR2,338 range.

"Technical charts and supply fundamentals suggest that prices may extend losses in the next trading session," said a senior trading executive at a Kuala Lumpur-based brokerage.

Palm production is rising in the July-September period and analysts said the July figure may rise as much as 10% on month. They said June output probably rose 5%-7%.

Traders said the fall in palm prices may help palm products regain market share as palm's premium had been shifting buyers to cheaper soyoil.

More weakness in prices is likely, due to the seasonal rise in palm oil supply, and a sharp fall in prices could bring palm olein back at a discount to soyoil after trading at a premium the past two months, Oil World's analyst and co-editor Siegfried Falk said in an interview recently.

He also said palm may develop a small price discount in the coming weeks.

In the cash market, palm olein for October/November/December was traded at $745/ton free on board Malaysian ports, said a Singapore-based trading executive.

Cash CPO for prompt shipment was offered MYR40 lower at MYR2,400/ton

CME Group Inc.'s dollar-based CPO futures contract for September wasn't traded in Asia, while rupiah-denominated September CPO futures on the Indonesia Commodity and Derivative Exchange were trading 0.3% lower at IDR6,250 a kilogram at 1020 GMT, with 87 lots done.

The October contract was trading 0.9% lower at IDR6,180/kg with 174 lots changing hands. One lot is equivalent to 10 tons.

Open interest on the BMD was 72,771 lots versus 72,093 lots Friday. One lot is equivalent to 25 tons.

A total of 11,214 lots of CPO were traded versus 8,941 lots Friday.

Closing BMD CPO futures prices in MYR/ton at 1000 GMT: 
Month   Close  Previous  Change   High    Low 
Jul'10  2,380     2,406  Down 26  2,401   2,380 
Aug'10  2,317     2,358  Down 41  2,359   2,311 
Sep'10  2,290     2,335  Down 45  2,338   2,290 
Oct'10  2,282     2,322  Down 40  2,325   2,282 
  -By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; 

No comments:

Post a Comment