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Friday, January 8, 2010

BURSA MALAYSIA >>> BMD Crude Palm Oil Futures 07 Jan 2010

Crude Palm Oil Ends Down; Likely Rise In Inventories, Selling Pressure
Crude palm oil futures on Malaysia’s derivatives exchange fell Thursday, pressured by favorable weather, crop prospects in South America and a broad-based selloff in commodity markets, trade participants said.

Prices tumbled at opening as investors took cues from heavy selling pressure in Chinese commodity markets on fears the China central bank may use policy tools to rein in inflation and curb excessive liquidity, said a trading executive from Hong Kong-based major vegetable oils processing company.

The benchmark March contract on the Bursa Malaysia Derivatives ended MYR72 lower at MYR2,630 a metric ton after tumbling as much as 2.7% or MYR74 to an intraday low of MYR2,628/ton.

"Prices are due for a correction as the rise in prices over the past few (trading) days wasn't sustainable," said a Kuala Lumpur-based broker.

Prices were also pressured by talk of a marginal fall instead of a sharp decline in Malaysia's December palm oil output, as this may mean rising palm inventory levels since export demand had remained sluggish.

Export demand from China is expected to be little changed on month as the country purchased its requirements for until February during the October-November period, trade participants said.

In October, China bought 496,229 tons of palm oil and 518,168 tons in November, according to data from China's General Administration of Customs.

Meanwhile, preliminary data from an industry body put Malaysia December CPO output down 5% on month, better than market expectations of a 12%-15% fall.

Domestic palm oil reserves are expected to remain high as trade participants estimate palm oil imports from Indonesia may have risen to 90,000-110,000 tons in December as importers scrambled to move cargoes out of the country to the Malaysian ports of Pasir Gudang and Port Klang ahead of an increase in export taxes this month, shipping brokers said.

Towards the end of December, Indonesia said it would hike the duty on CPO exports to 3% in January, after maintaining it at zero for the past five months, as global palm oil prices and demand are expected to rise.

Panic selling in Chinese commodities on the Dalian Commodity Exchange served as a catalyst for losses in other commodity markets such as crude oil and soyoil futures.

At 0951 GMT, light, sweet crude for February delivery on the New York Mercantile Exchange was down 35 cents at $82.83 a barrel on Globex.
March soyoil on the Chicago Board of Trade was trading 60 points lower at 40.47 cents a pound by the end on trade on the BMD in electronic session.

In the cash market, palm olein for February traded lower at $810/ton, April/May/June was $820/ton and $822.50/ton, free on board Malaysian ports, a Singapore-based broker said.

Cash CPO for prompt delivery was offered MYR50 lower at MYR2,600/ton.
Open interest on the BMD was 77,811 lots, up from 76,088 lots traded Wednesday. One lot is equivalent to 25 tons.
A total of 16,843 lots of CPO were traded versus 14,379 lots traded Wednesday.

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