Crude Palm Oil Ends Up; Rising Supply Limits Upside

Crude palm oil futures on Malaysia’s derivatives exchange rose Monday in a mild correction of last week’s losses, with support in late trade from a slight rebound in Chicago soyoil.

The benchmark June contract on the Bursa Malaysia Derivatives ended MYR21 higher at MYR3,282 a metric ton.

“The market is vulnerable to further declines as March production is rising,” said an analyst at an international bank in Singapore. “Unless there is a major disruption in other oilseed crops, I expect palm oil to trade in a MYR3,150-MYR3,300/ton range this week.”

Output in Malaysia, the world’s second-largest palm oil producer, is improving this month, signalling the end of a seasonally low production cycle. Oil palm trees generally produce more palm fruits from April to August, and a significant jump in supplies may weigh on prices in the next few months.

“Investors are also concerned that stockpiles will rise more, as export demand hasn’t been fantastic,” said a vegetable oil exporter in Johor.

Malaysia’s export figures for the March 1-25 period were lower than in the first 25 days of February, even though they were better than expected. Surveyors SGS and Intertek estimated that March 1-25 shipments fell 0.3% and 3.7%, respectively.

In the cash market, palm olein for May and June shipment was traded at $1,132.50/ton and $1,135/ton, while July, August, September shipment was traded several times at $1,120/ton, free on board Malaysian ports, said a physical market broker in Singapore.

Cash CPO for prompt shipment was offered MYR10 higher at MYR3,360/ton.

The most-active rupiah-denominated June CPO contract on the Indonesia Commodity & Derivatives Exchange was down 0.3% at IDR9,520 a kilogram at 0951 GMT.

CME Group’s dollar-based palm oil contract for June was $31 lower at $1,079.25/ton at 0951 GMT.

Open interest on the BMD was 90,458 lots, compared with 92,541 lots Friday. One lot is equivalent to 25 tons. A total of 19,805 lots of CPO were traded versus 31,114 lots Friday.

Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: 

Month   Close  Previous  Change    High    Low
Apr'11  3,335     3,320  Up  15    3,340   3,320
May'11  3,301     3,288  Up  13    3,324   3,284
Jun'11  3,282     3,261  Up  21    3,305   3,252
Jul'11  3,272     3,252  Up  20    3,292   3,244 

-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com

(END) Dow Jones Newswires

March 28, 2011 06:51 ET (10:51 GMT)

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