BURSA MALAYSIA >>> BMD Crude Palm Oil Futures 17 Dec 2009

Crude Palm Oil Futures End Up 1.3% On Speculative Buying, Weather

Crude palm oil futures on Malaysia’s derivatives exchange Thursday rose as much as 1.6% to a six-month high following speculative buying and short covering, trade participants said.

Trade participants and planters said recent heavy rains in the oil palm growing areas of Perak, Kelantan and Terengganu were positive for prices. The rains will likely continue until Tuesday night, a spokeswoman from the Malaysian Meteorological Department said.

The benchmark March contract on Bursa Malaysia Derivatives ended 1.3% higher at MYR2,620 a metric ton, a closing level not seen since June 1.

Prices rose to an intraday high of MYR2,628 in the early session.

"Some investors have set up long positions, which they may liquidate during the day to take profits," a trading executive in Kuala Lumpur said during early trading.

"The market is overbought and prices may ease on profit-taking towards the end of the year. CPO prices are due for a downward correction," said an edible oils trader in Mumbai. Edible oil prices have been rising in India amid sustained demand due to the marriage season that began September and ends January.

Most buyers aren't making sizeable purchases as palm oil is considered too expensive, he added.

"At MYR2,600 levels, buyers aren't interested in stepping up purchases unless there's a real threat to supply fundamentals, which may trigger panic buying," said a senior broker from Kuala Lumpur.

At 1003 GMT, during the electronic session, light, sweet crude for January delivery was trading 57 cents lower at $72.09 a barrel.

January soyoil on the Chicago Board of trade was trading 23 points lower at 40.10 cents a pound on e-CBOT by the end of trade on BMD.

In the cash market, palm olein for April/May/June was traded at $800/ton and $802.50, free on board Malaysian ports, said a Singapore-based trader.

Cash CPO for prompt delivery was offered MYR40 higher at MYR2,580/ton.

Open interest was 83,414 lots Wednesday, down from 84,371 lots. One lot is equivalent to 25 tons.

A total of 22,542 lots of CPO was traded on the BMD, versus 16,437 lots Thursday