BURSA MALAYSIA Derivative Markets >>> FKLI and FCPO Overview 04 Dec 2009

FBM KLCI Futures Close Lower In Lacklustre Market
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) futures contract on Bursa Malaysia Derivatives closed slightly lower on Friday in lacklustre market, dealers said.

The December 2009 contract eased 0.5 of a point to settle at 1,267, March 2010 lost 1.5 points to 1,268 and June 2010 was one point lower at 1,269.

January 2010 contract, however, was unchanged at 1,268.

The day's volume dwindled to 3,003 lots as against Thursday's closing of 4,287 lots while open interest rose to 18,491 contracts from 17,708 contracts yesterday.

On the cash market, the underlying FBM KLCI edged down 2.15 points to close at 1,270.20.

Crude Palm Oil Ends At 6-Month High On Price Outlook
Crude palm oil futures on Malaysia's derivatives exchange ended at a six-month high following a bullish price outlook by analysts, likely lower palm oil output in Malaysia and a strengthening El Nino that may result in lower production, trade participants said Friday.

The benchmark February contract on the Bursa Malaysia Derivatives exchange ended MYR84 up at MYR2,562 a metric ton, after moving in a MYR2,473-MYR2,596/ton range.

Crude palm oil prices may rise as much as 20% to MYR3,000/ton by March 2010 as supply won't be able to match demand growth, according to London-based vegetable oil analyst Dorab Mistry.

A global economic recovery may boost worldwide vegetable oil demand to 5.5 million tons, outstripping supply of 4.5 million tons in 2010.

"Between now and the end of the first quarter of 2010, I expect CPO to rise to a level between MYR2,800 and MYR3,000," Mistry told an international conference on vegetable oils in Bali, Indonesia.

While the rise in soyoil prices will be moderated by likely higher supply from South America in April, rising biodiesel demand may boost soyoil prices to $950/ton next year, Mistry added.

Palm oil prices are set for a rally in the coming year, as output in Malaysia may fall below a projected 17.5 million tons, according to Mistry, since a massive replanting program in Malaysia and the development of an El Nino weather phenomenon may hurt production in the second half of next year.

At the same conference, Derom Bangun of the Indonesian Palm Oil Association said crude palm oil prices may rally to as much as $800/ton, or MYR2,700/ton, in the first quarter next year.

Prices may ease from April onward as supply in Indonesia, the world's biggest producer, is expected to rise, he added. Indonesia will likely produce 20 million tons in 2009 and that figure may rise by 1 million-2 million tons by end-2010, said Bangun.

A likely decline in palm oil output also helped support prices.

Malaysia's palm oil output may have declined from October's record high production of 1.99 million tons, as seasonal rains slowed down harvesting of palm fruits and floods in several states likely disrupted transportation of palm oil to refineries and ports.

Most plantation companies have reported at least a 10% decline in palm oil output in November, said an official at the Malaysian Palm Oil Board.

Output probably fell to 1.75 million-1.79 million tons as of end-November, plantation company executives and traders said.

Malaysian palm oil stocks were estimated to have risen to 1.98 million-2 million tons in November as palm oil imports from Indonesia likely rose to 100,000-150,000 tons while domestic consumption is estimated around 200,000 tons, said a senior executive from Kuala Lumpur-based trading company.

Cargo surveyors put November exports at 1.42 million-1.46 million tons.

Even though palm oil stocks are likely to have risen close to the psychological level of 2 million tons, prices aren't going to decline much, said a Malaysia-based exporter.

"Prices will probably move higher towards the end the of year, in anticipation stocks will ease as production falls end-December." Output is expected to be lower in December as peak production would have ended in November, said analysts.

In the cash market, cash palm olein for January/February/March shipment was traded at $795/ton, April/May/June at $780/ton, a Singapore-based trader said.
Cash CPO for prompt delivery was offered at MYR70 higher at MYR2,500/ton.
A total of 22,897 lots of CPO were traded on the BMD versus 9,903 lots Thursday.
Open interest was 90,022 lots Friday, up from 89,092 lots. One lot is equivalent to 25 tons.

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