MALAYSIA DERIVATIVES EXCHANGE : Crude Palm Oil

CPO Falls 0.74% On Profit Taking

Crude palm oil futures on Malaysia’s derivatives exchange fell Wednesday, following an overnight selloff in commodity markets after Goldman Sachs told investors to book profits while warning of a correction in crude prices.

The benchmark June contract on the Bursa Malaysia Derivatives ended MYR25 or 0.74% lower at MYR3,348 a metric ton, after tumbling as much as 2.1% to MYR3,302/ton, the lowest level since March 21.

Futures also came under pressure as buying interest in the physical market was anemic, despite palm oil’s wide discount of around $150/ton to competing soyoil.
“Buyers in India and China are not biting, despite weak prices, as domestic oils are now offered at par if not cheaper than palm oil,” a physical market broker in Kuala Lumpur said.
India, a major edible oil consumer, may import less soyoil and palm oil in the next few months as its domestic rapeseed crop production has improved, making local oil prices cheaper than palm.
China plans to sell around 3 million tons of soybeans below market prices from state reserves and this “means imported palm oil will be more expensive than local oil,” a trading executive in Kuala Lumpur said.

Palm oil prices may slip more during the rest of the week, weighed by higher CPO output in Malaysia and increasing yields in Indonesia as trees mature.

“Ample rainfall in 2010 should boost output in 2011 as oil palms are water-loving trees and tend to benefit 6-12 months after rains,” Kuala Lumpur-based Credit Suisse analyst Tan Ting Min said.

In the cash market, palm olein for July, August and September shipments were traded from $1,132.50 to $1,137.50.
Cash CPO for prompt shipment was offered MYR40 lower at MYR3,400/ton.

The most-active rupiah-denominated June palm oil contract on the Indonesia Commodity & Derivatives Exchange was trading 0.4% lower at IDR9.675/ton, while CME Group’s dollar-based palm oil contract for June was down $13.75 at $1,109.75/ton at 0947 GMT.

Open interest on the BMD was 105,504 lots compared with 105,504 lots Tuesday. One lot is equivalent to 25 tons. A total of 31,113 lots of CPO were traded versus 31,113 lots Tuesday.

HAPPY TRADING