Friday, January 11, 2013

Crude Palm Oil Ends Down; Declining CPO Output Limit Fall

Crude palm-oil futures on Malaysia’s derivatives exchange fell Friday and headed for a weekly decline of 4% as Malaysian export demand falls.

The benchmark March contract at Bursa Malaysia Derivatives ended 0.9% lower at 2,366 ringgit a metric ton after falling as much as 2.3% to MYR2,332/ton.

The latest palm-oil export estimates by cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. show a slump in shipments to big consumer China which reflect exporters' reluctance to ship cargoes because of uncertainty about China's new quality-control rules.

China won't accept imports of edible oils containing excessive peroxide or stearic acid from Tuesday, according to China's Inspection and Quarantine Bureau.

Palm-oil inventory levels in December hit a high of 2.53 million tons. But analysts expect stocks to ease in the coming months as CPO output continues to decline during the January-March period as a result of seasonal factors.

"The downside for CPO prices is relatively limited given parity to Brent crude prices which will help trigger demand for use in the energy sector," Alvin Tai, senior plantation analyst at Kuala Lumpur-based OSK Investment Bank, said.

Malaysia's move to cut the tax on CPO exports and abolish a duty-free shipment quota from the beginning of January will have "some positive impact on [CPO] shipments," he said. "We should see the effects the next one to two months," he said.

For the week ahead investors are likely to monitor export trends during the Jan 1-15 period to see whether a new tax rate has helped boost orders. Malaysia is scheduled to announce its February CPO export-tax rate on Tuesday.

Open interest on the BMD was 173,776 lots versus 170,416 lots Thursday. One lot is equivalent to 25 tons.

Ending BMD Crude Palm Oil (CPO) futures prices in MYR/ton: 
Month   Close  Previous  Change   High    Low 
Jan'13  2,260     2,275     -15  2,255  2,251 
Feb'13  2,330     2,339      -9  2,326  2,298 
Mar'13  2,366     2,387     -21  2,377  2,332 
Apr'13  2,395     2,419     -24  2,411  2,356 

Write to Shie-Lynn Lim at

(END) Dow Jones Newswires

January 11, 2013 05:47 ET (10:47 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.

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