Crude Palm Oil Ends Up, Tracking Crude Oil, Physical Demand

SLIGHTLY FIRMER
Crude palm oil futures on Malaysia’s derivatives exchange ended higher Tuesday on the back of short covering and fresh buying interest as crude oil rebounded, trade participants said.

The August contract on the Bursa Malaysia Derivatives ended MYR20, or 0.8%, higher at MYR2,445 a metric ton after moving in a MYR2,417-MYR2,450 range. The benchmark contract tumbled to MYR2,406/ton, its lowest intraday level since Jan. 28.

Physical market demand helped to lift futures contracts off lows, an executive at a Malaysia-based plantation company said. "Many (traders) were buying for prompt loading at their vessels, so purchases (of CPO and palm olein) for the May-June period will be steady."

Steady demand for CPO and palm olein, key ingredients used by food processors, may boost prices of the palm-based vegetable oils and could draw down end-month inventory levels.

Palm olein in the cash market was traded at $785/ton, $787.50 and $780/ton for July/August/September shipment. Palm olein for June shipment traded at $797.50/tons, free-on-board Malaysian ports, a Singapore-based broker said.

June crude oil on the New York Mercantile Exchange gained as much as 2.7% to $71.99 a barrel on Globex. On Monday, the front-month contract fell below $70 a barrel the first time since Feb. 5 amid fears that euro-zone debt may slow global economic recovery, cutting demand.

Some trade participants said the ringgit's firmness against the dollar prevented a slide in prices today. The ringgit was only slightly higher against the greenback, at MYR3.2110 versus MYR3.2260 Monday.
CPO futures will take cues from external markets, with euro-zone debt issues also likely to swing prices, which "are likely to remain in MYR2,400-MYR2,480 range this week" said a trading executive in Kuala Lumpur.

Open interest on the BMD was 64,417 lots, versus 64,006 lots Monday. One lot is equivalent to 25 tons.
A total of 8,611 lots of CPO were traded versus 14,915 lots Monday.