BURSA MALAYSIA Overview >>> FKLI and FCPO 22 Dec 2009

FKLI contracts ended mixed; All months turned discounts to underlying cash
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) futures on Bursa Malaysia Derivatives ended mixed & turned discount Tuesday despite a higher cash market, said dealers.

The December contract closed 1.0 point lower at 1,258.0 points, reversing its 3.34 points premium Monday to 2.42 points discount. The contract however opened 1.5 points firmer at 1,260.5 points and traded between 1,256.0 and 1,261.0 points during the day.

The January 2010 contract eased 0.5 of a point to 1,258.5 points, which is a discount of 1.92 points to the cash market against a premium of 3.34 points a day earlier. It traded between 1,256.5 and 1,261.0 points during the day.

The March 2010 contract rose 1.0 point to 1,258.0 points, which is a discount of 2.42points, while the June 2010 contract closed 1.0 point higher at 1,258.5 points, representing a discount of 1.92 points to the underlying.

Total volume declined to 2,585 lots from 2,740 lots on Monday while open interest rose to 17,801 contracts from 17,061 contracts.

The underlying FBM KLCI ended the day at 1,260.42, up 4.76 points after opening 3.23 points higher at 1,258.89 Tuesday morning.

Crude Palm Oil Ends Down On Profit-Taking, Stronger Dollar
Crude palm oil futures on Malaysia's derivatives exchange fell for the second day Tuesday on continued profit taking triggered by weakness in Chinese commodities and a stronger dollar.

The benchmark March contract on the Bursa Malaysia Derivatives ended MYR40 or 1.6% lower at MYR2,515 a metric ton, after trading in a range of MYR2,514-MYR2,550/ton.

Trade expectation that the Chinese government may release 200,000 tons of soyoil and 300,000 tons of rapeseed oil from its reserves toward the end of this year has dampened sentiment on the Dalian Commodity Exchange, leading to spillover weakness on the BMD, traders said.

"Investors will be monitoring China's decision on whether it will release its reserves," said a Malaysia-based exporter.

"The palm oil market went up too high last week. Some correction and liquidation is expected at intervals until the end of the year," said a Singapore-based trading executive.

He said despite some profit taking, a sharp fall in prices seems unlikely because of strong industrial demand for palm oil from China, the world's major buyer of vegetable oils.

"Despite higher CPO prices, demand from China has remained fairly robust, as Chinese buyers are stocking up for the Chinese New Year in February," he added.

While cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. estimated a decline in Malaysia's palm oil exports during the Dec. 1-20 period by around 7%, exports to China have risen by 7%-13% on month.

Intertek put exports to China up 7.5% at 263,610 tons during the period, while SGS pegged Chinese palm purchases at 288,338 tons versus 255,530 tons during Nov. 1-20.

Most traders say prices may decline to the MYR2,450-MYR2,480 range toward the end of the year as investors square positions ahead of year-end holidays.

In other news, Indonesia's trade ministry said it will raise the CPO export tax to 3% in January after keeping it at zero for the past five months, in anticipation of a rise in global palm oil prices.

Palm oil prices at the port of Rotterdam had risen to around $769.20/ton last month, above the $701/ton threshold that would trigger an export tax on Indonesian CPO.

In the cash market, palm olein for January was traded at $765/ton and April/May/June at $770/ton, free on board Malaysian ports, said a Singapore-based trader.

Cash CPO for prompt delivery was offered MYR20 lower at MYR2,500/ton.
Open interest was 84,064 lots Tuesday, down from 84,126 lots. One lot is equivalent to 25 tons.
A total of 19,521 lots of CPO were traded on the BMD, versus 17,906 lots Monday.