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Thursday, October 7, 2010

CPO firms as edible oil rebound on global cues

CPO Rises On Speculative Buying;
Global Edible Oil Rebound
After declining continuously in the last three trading sessions, global edible oil prices bounced back on Wednesday, taking cues from international markets and Indore soya futures. Stockists' buying was lower. The volume was thin.

On the Mumbai spot market, palmolein rose by Re1 for 10 kg, soya refined oil increased by Rs 5. Groundnut oil went up by Rs 10 on a sudden demand spurt in Gujarat, where groundnut oil( in tins of 10 kg and “loose”) rates shot up by Rs 20-30. Other oils such as cottonseed, sunflower oils ruled steady. Rapeseed oil dropped by Rs 5. Palm olein prices, free-on-board Malaysian ports, are currently about $40-$50/ton cheaper than Argentinian soyoil

So far, demand in the physical market has been tepid this week due to holidays in China and higher cash palm oil prices.

The Bursa Malaysia Derivatives crude palm oil November and December futures closed higher by 27 and 25 ringgits (MYR) respectively and they may extend gains in the coming days, tracking rebound in soya oil futures and speculative buying. Indore soya oil futures rose sharply initially. However, profit–booking by speculators cooled down the market. Demand for palmolein eased and the total volume was about 300-400 tonnes lower on Wednesday, market sources said. Refineries were quoting higher rates in the line with firm international markets.

The benchmark December contract on the Bursa Malaysia Derivatives exchange ended MYR25 higher at MYR2,730 a metric ton after rising close to a week high of MYR2,735/ton.

Traders said September palm oil production was probably unchanged to 2% lower on month, which gave support to the strength in prices. Some trade participants said export shipments may increase in October due to a higher price discount between palm olein and soyoil.

"Cash palm offer prices increase by about $3/ton when the ringgit strengthens," said a Pasir Gudang-based exporter of palm oil.

The ringgit has appreciated 11% against the U.S. dollar so far this year.

"There's still buying interest for palm oil, but price-sensitive countries such as India and China will be more cautious with their purchases," the exporter said.

Buy at weakness below 2670
Sell Into Strength above 2755

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