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Thursday, January 21, 2010

BMD Crude Palm Oil Futures Market Overviews

Crude Palm Oil (CPO) Futures End Up; Rains May Trim Output, Stocks
Crude palm oil futures on Malaysia’s derivatives exchange rebounded Thursday after tumbling to their lowest levels in two months on fresh buying and short covering on cues from a recovery in crude oil and soyoil prices, trade participants said.

The benchmark April CPO contract on the Bursa Malaysia Derivatives ended MYR44 higher at MYR2,488 a metric ton, after rising to an intraday high of MYR2,490/ton.

The contract opened lower on long liquidation, falling in early trade as much as MYR37 or 1.5% to MYR2,407/ton, its lowest intraday price since Nov. 20, but prices moved into positive territory and further extended gains during the afternoon session on a likely fall in production and palm inventories.

If soyoil rises overnight, CPO prices could rise to MYR2,500 level in the next trading session, a Malaysia-based exporter said.

"Some investors are expecting exports around 1.3 million tons in January. That and the decline in output may push palm oil inventories to around 2.10 million tons, which is bullish for prices," said a Kuala Lumpur-based trading executive.

Continuing rains have slowed oil palm harvesting in Sabah, Sarawak, affecting output. Traders and growers estimate that output has dropped around 15%-16% so far this month.

Lower output may reduce Malaysia's palm oil inventories towards the 2.10 million-ton level from 2.24 million tons at end-December, an analyst with a Singapore-based research firm said.

Towards the end of trade on BMD, March soyoil on the Chicago Board of Trade was trading 48 points higher at 37.05 cents/pound.

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