Bursa Malaysia Derivative Markets FKLI and FCPO Overview 23 Nov 2009

FBM KLCI Futures Mar 2010 contract joined Nov and Dec closing at discounts
The KLCI Futures contracts ended mixed Friday with the nearer contracts closing higher but further contracts settling lower with the March 2010 contract turning to discounts, joining with the November and December contracts.

The November contract rose 3.0 points to 1,274.0 points, trimming its discount to the underlying to 2.49 points from 5.65 points Thursday. It opened 1.0 point higher at 1,272.0 points and traded between 1,266.5 and 1,277.0 points during the day.

The December contract added 1.0 points to 1,273.5 points, reducing its discount to the cash market to 2.99 points from 4.15 points a day earlier. It traded between 1,267.0 and 1,276.0 points during the day.

The March contract eased 2.5 points to 1,274.5, representing a discount of 1.99 points, while the June 2010 contract edged down 2.0 points to 1,278.0, representing a premium of 1.51 points.

BMD Crude Palm Oil Ends Up 2.8%; Speculative Buying In Oils
Crude palm oil futures prices on Malaysia’s derivatives exchange rose as much as 3.1% Monday, its highest level since Aug. 14, due to speculative buying interest and higher crude oil and soyoil prices.

The benchmark February contract on the Bursa Malaysia Derivatives exchange ended MYR67 or 2.8% higher at MYR2,486 a metric ton, after rising to an intraday high of MYR2,489/ton.

The February contract remained above the MYR2,400 level throughout the day. Palm oil futures were up 6.5% from last Monday, driven by palm oil's widening discount to rival soyoil prices.

Refined palm olein is currently trading around $150/ton cheaper than soyoil futures, making refined palm products an attractive alternative for price-sensitive buyers.

Palm oil prices have been rising despite a jump in palm oil inventories to 1.98 million tons last month. Trade participants said rising export demand from China and Europe may lead to a stock drawdown in November.

It is uncommon for both China and Europe to buy more palm oil in winter, because palm oil tends to turn into a solid in cold weather earlier than other vegetable oils.

China's palm oil imports rose 65% on year to 463,229 tons in October, according to the country's General Administration of Customs.

"With palm oil prices rallying near the MYR2,500 level, the market may be poised for long liquidation and profit-taking in the next trading session," an executive from a global trading company said.

Palm oil price direction may also hinge on export momentum in December, a company executive from Malaysia-based plantation company said.

"If November's export momentum is maintained into December, there'll be a further drawdown in stocks. However, if December exports fail to match November's pace, then we'll expect some accumulation in inventories," the company executive said.

Many producers and exporters are expecting December palm oil exports to be weak, as major vegetable oils buyers would generally have locked in their requirements through January.

Malaysia's palm oil growers said November's palm oil output will likely fall 10%-15% from the previous month, as localized floods and heavy rains disrupted harvesting activities and prolonged soil moisture may affect oil palm yields.
In the cash market, cash palm olein for April/May/June was traded several times at $760/ton, $772.50/ton and $775/ton, free on board Malaysian ports, a Singapore-based trading executive said.

Cash CPO for prompt delivery was offered MYR50 higher at MYR2,400/ton.
A total of 17,388 lots of CPO were traded on the BMD versus 13,093 lots Friday.
Open interest was 95,832 lots Monday, down from 96,736 lots. One lot is equivalent to 25 tons