Crude palm oil futures on Malaysia’s derivatives exchange ended higher Friday, with leads from gains in external markets and the weaker dollar prompting investors to cover short positions.The benchmark December contract on the Bursa Malaysia Derivatives exchange ended MYR14 higher at MYR2,930 a metric ton, after moving in a MYR2,915-MYR2,948 range.
Prices were mostly higher with "the rally in soyoil futures propelling gains in CPO," said a Kuala Lumpur-based trading executive.
Exports for the first 15 days of October were within or slightly better than expectations, preventing a sharp fall in prices. Investors were concerned that slower purchases of palm oil by international buyers could lead to a surge in end-month inventory levels, which would weigh on CPO prices.
Cargo surveyor SGS (Malaysia) Bhd., put exports at 606,243 tons, down 4.1% but better than traders estimates of shipments at 590,000 tons.
At 1030 GMT, Chicago Board of Trade December soyoil was trading 4 points higher at 48.06 cents a pound in electronic trading.
In other news, Malaysia in its annual economic report forecast that CPO production may rise 3.4% to 18.4 million tons next year on improving yields and an increase in mature palm areas in the major producing regions of Sabah and Sarawak.
Some trade participants said the government's plan to allocate MYR297 million for an oil palm replanting program could support prices as the plan "may clip Malaysia's palm oil supply in the short term," Singapore-based OCBC Investment Bank plantation analyst Carey Wong said.
Wong also noted that the 3.4% rise in output projected next year wasn't overwhelming, "as any adverse weather going forward could potentially wipe out that increase (in production)."
Some market participants said CPO futures could move slightly lower next week, as soyoil futures could ease on profit-taking later in the global day Friday. "CPO futures may trade around the MYR2,900-MYR2,970/ton range next week," a Malaysia-based broker said.
In the cash market, palm olein cargoes for January/February/March were traded unchanged from Thursday's traded price at $1,000/ton, April/May/June shipments traded $7.50 higher at $997.50/ton, free on board Malaysian ports, said a Singapore-based trading executive.
The most active December rupiah-denominated CPO contract on the Indonesia Commodity and Derivatives Exchange was trading around 0.5% higher at IDR8,485/ton.
The dollar-denominated CPO contract for December on Globex was trading at $944.50/ton, $1.75 lower from Thursday's close.
Cash CPO for prompt shipment was offered MYR10 higher at MYR2,940/ton.
Open interest on the BMD was 68,320 lots, versus 69,515 lots Thursday. One lot is equivalent to 25 tons.
A total of 19,448 lots of CPO were traded versus 22,166 lots Thursday.
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