BURSA MALAYSIA CPO MARKET OVERVIEW 12 DEC 2009

Crude Palm Oil Ends Up In Rangebound Trade
Crude palm oil futures on Malaysia’s derivatives exchange ended higher Friday in cautious, rangebound trade, said trade participants.
The benchmark February contract on Bursa Malaysia Derivatives ended MYR9 higher at MYR2,530 a metric ton after moving between MYR2,505 and MYR2,535/ton.
The February contract didn't move above MYR2,550 due to a lack of buying in the cash market and unwinding of positions at short intervals in the run up to the year-end.

"Many investors are liquidating positions at short intervals before the fiscal year ends," said a Kuala Lumpur-based executive from a foreign trading firm.

Trade participants said prices are likely to move mostly between MYR2,450-MYR2,550 in the next few trading sessions due to the year-end closing accounts by investors.

"Unless there're significant leads on export demand or a sharp drawdown in palm reserves, prices will face strong resistance at the MYR2,600 level in the next week," said a senior executive from a Kuala Lumpur-based commodities brokerage.

Shipping executives and cargo officers said Malaysia palm oil export momentum for the first 15 days in December is likely to grow marginally.

"The pickup (in export demand) is likely to be 5%. Based on preliminary data, it seems exports for the whole of December will be marginally up by 6%-7% from November," said a Penang-based shipping executive.

Cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. put November exports at 1.42 million-1.46 million tons.

Export estimates for the Dec. 1-15 period will be issued on Tuesday.

Open interest on BMD Crude Palm Oil (CPO) futures have dropped 6.4% since last Friday, as investors unwound positions towards the end of the year.

In the cash market, palm olein for April/May/June was traded at $787.50/ton, FOB Malaysian ports, a Singapore-based trading executive said.

He said buyers were at least $10.00/ton away from sellers. Cash CPO for prompt delivery was offered MYR30 higher at MYR2,470/ton.
A total of 13,327 lots of CPO were traded on the BMD versus 20,308 lots Thursday.
Open interest was 85,822 lots Friday, down from 86,950 lots. One lot is equivalent to 25 tons.