DJ Asian Crude Palm Oil Drops On Profit Taking; Fundamentals Support 15.11.2011
SINGAPORE (Dow Jones)--Crude palm oil futures on Bursa Malaysia Derivatives exchange dropped Tuesday due to profit taking following a recent rally.
Regional equity markets and Dalian palm oil also weighed on CPO prices.
The BMD benchmark January contract ended 0.6% lower at MYR3,176 a metric ton after testing a near five-month high of MYR3,209/ton in intraday trade.
The euro zone's sovereign debt issues put some downward pressure on prices due to concerns that newly-elected leaders won't successfully implement aggressive financial reforms, a trading executive in Kuala Lumpur said.
But non-macroeconomic factors are more likely to dominate CPO prices in the coming days. "There's a lot of buying interest in the market," he said.
The medium-term outlook for CPO is bullish as demand-side fundamentals are supportive and supply risks remain due to expected La Nina wet weather conditions, said Ker Chung Yang, a commodities analyst at Phillip Futures Singapore.
He expects CPO prices to consolidate above the MYR3,100/ton level in the coming sessions.
A likely decline in palm oil inventories in the coming months on the back of continued strength in export demand will likely push prices towards the MYR3,300/ton level by January, he said.
In a monthly report, industry regulator Malaysian Palm Oil Board said last week that end-October palm oil stocks fell 1.6% from the previous month to 2.10 million tons.
End-October stocks were lower than market expectations of about 2.25 million tons, Ker said.
Meanwhile, outbound sales of Malaysian palm oil from Nov. 1-15 rose 10.5% from the previous month to 801,463 tons, cargo surveyor Intertek Agri Services said Tuesday.
Another surveyor, SGS (Malaysia) Bhd., put the figure at 802,917 tons, an increase of 11.6% from the previous month, later today.
Investors expect fresh cues from the three-day MPOB International Palm Oil Conference in Kuala Lumpur that ends Thursday; leading oilseeds analyst James Fry and other eminent industry executives are scheduled to speak at the event.
In the cash market, refined palm olein was offered $5 higher at $1,085/ton while cash CPO for prompt shipment was unchanged from Tuesday at MYR3,200/ton.
Open interest on the BMD was 136,716 lots, versus 137,918 lots Monday. One lot is equivalent to 25 tons.
A total of 45,423 lots of CPO were traded versus 15,050 lots Monday.
Closing BMD CPO futures prices in MYR/ton at 1030 GMT: Month Close Previous Change High Low Nov'11 3,180 3,170 +10 3,180 3,180 Dec'11 3,184 3,208 -24 3,218 3,175 Jan'12 3,176 3,195 -19 3,209 3,163 Feb'12 3,178 3,194 -16 3,206 3,157