DJ Asian Crude Palm Oil Off Lows; Fundamentals Limit Fall 05.08.2011
KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange bounced off lows Friday, recovering from a 3% drop earlier in the day on the back of supportive fundamentals, with investors awaiting U.S. jobs data later in the global day.
Benchmark October CPO on the Bursa Malaysia Derivatives ended 1.5% lower at MYR3,055 a metric ton.
Concerns over the global economic outlook triggered a broad selloff across equities and commodities, which led to palm oil tumbling to MYR3,021/ton, the lowest level since July 6.
"The CBOT grains market may be susceptible to further selling, but the same cannot be said for palm oil," S. Paramalingam, executive director at Kuala Lumpur-based brokerage Pelindung Bestari Sdn. Bhd, said.
Palm oil's wide price discount to competing soyoil and nearby supply tightness will cap declines, he said.
Refined palm olein for September shipment is offered $85/ton cheaper than soyoil from Argentinian ports, physical market data showed.
Traders said August palm output may fall slightly as workers are away during the Islamic fasting month that began this week, which may lead to a rebound in palm oil prices next week.
Meanwhile, Malaysia's palm oil exports may reach 16.5 million tons this year from an estimated 15.0 million-15.5 million tons last year, Wan Mohd Zain Wan Ismail, chairman at the Palm Oil Refiners Association of Malaysia, said.
"We are expecting [overall 2011] production to be on the higher side, which will boost exports," Ismail said on the sidelines of a forum in Mumbai.
Ismail also said prices may slip to MYR2,800-MYR2,900/ton in the next three months, as palm oil production may pick up after a dip in August, with output set to peak during the September-October period.
In the cash market, refined palm olein for September was offered $10 lower at $1,155/ton.
Cash CPO for prompt shipment is offered MYR20 lower at MYR3,150/ton.
Traded volume in crude palm oil futures on the BMD rose to 35,350 lots from 22,770 lots Thursday. One lot equals 25 tons.
Open interest was 127,541 contracts compared with 129,671 contracts.
Closing BMD CPO futures prices in MYR/ton at 1030 GMT: Month Close Previous Change High Low Aug'11 3,140 3,170 Down 30 3,140 3,130 Sep'11 3,079 3,121 Down 42 3,091 3,045 Oct'11 3,051 3,101 Down 50 3,063 3,021 Nov'11 3,044 3,091 Down 47 3,048 3,010