Crude palm oil futures on Malaysia’s derivatives exchange ended mostly lower Wednesday, as investors booked profits due to expectations of rising supplies this month. The benchmark June contract on the Bursa Malaysia Derivatives ended MYR2 lower at MYR3,306/ton, after trading both ways.Prices were mostly higher during the day, underpinned by gains in agri-based commodities and on concerns that global vegetable oil supplies may remain tight due to a loss of acreage in the U.S.
Traders are concerned that farmers won’t plant enough soybeans and corn this spring to replenish tight global supplies due to competition for acres from cotton. May soyoil on the Chicago Board of Trade rose 11 points at 55.97 cents a pound at 0933 GMT.
But higher March production estimates by planters pressured palm oil prices lower, said an analyst at a Kuala Lumpur-based investment bank.
Planters from listed and private palm oil firms estimate production has risen 16% so far this month, with the bulk of the growth coming from the major oil palm growing state of Sabah.
“This (production estimate) is a bearish view and will weigh on the market as most are expecting only a 10% increase in March production,” a Singapore-based trading executive said.
Output in the world’s second largest producing country after Indonesia is expected to improve in 2011 after two consecutive years of declines, as weather conditions improve, favoring crop development as yields rise.
Malaysia’s output fell from 17.6 million metric tons to 17 million tons in 2010, as persistently bad weather–beginning with drought-inducing El-Nino, followed by heavier-than-usual rainfall that is linked to the La Nina phenomenon–sapped yields and slowed harvesting progress.
In other palm oil markets, the most active rupiah-denominated CPO contract for June on the Indonesia Commodity & Derivatives Exchange was up 0.2% at IDR9,660 a kilogram at 0907 GMT.
CME Group’s dollar-based palm oil contract for June was last traded $9 lower at $1,100.50/ton at 0905 GMT.
Open interest on the BMD was 93,157 lots, versus 90,920 lots Tuesday. One lot is equivalent to 25 tons.
A total of 26,032 lots of CPO were traded versus 25,617 lots Tuesday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT:
Month Close Previous Change High Low
Apr'11 3,347 3,360 Down 13 3,410 3,345
May'11 3,328 3,335 Down 07 3,388 3,320
Jun'11 3,306 3,308 Down 02 3,326 3,301
Jul'11 3,302 3,293 Up 09 3,310 3,294
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
March 23, 2011 06:27 ET (10:27 GMT)
Copyright (c) 2011 Dow Jones & Company, Inc.
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