Crude Palm Oil Lower On CBOT Soyoil; Liquidation - Palm OilHQ

Crude palm oil futures on Malaysia’s derivatives exchange ended lower Wednesday as investors liquidated long positions tracking general weakness across most commodity markets.

The benchmark May contract on the Bursa Malaysia Derivatives ended MYR155 lower at MYR3,514 a metric ton, off the intraday high of MYR3,558/ton.

Chicago March soyoil also weighed on palm oil prices; soyoil futures on the Chicago Board of Trade ended 4.4% lower at 53.99 cents a pound Tuesday; the contract was also 0.5% lower in screen trade around 1020 GMT.

Palm oil prices were also lower as rains have eased in Malaysia’s major palm growing regions and February production may rise as much as 5%-6% compared with the previous month, said a Singapore-based trader.

January palm oil production reached 1.06 million metric tons, according to data from the Malaysian Palm Oil Board.

Palm oil prices could correct further as output gradually rises in Malaysia and Indonesia, Lee Oi Hian, chief executive of Malaysian palm oil producer Kuala Lumpur Kepong Bhd. (2445.KU), said.

“While palm oil’s fundamentals are still good, the market has risen too high. The rally may be running out of steam and CPO may ease to MYR3,300-MYR3,500/ton,” Lee told Dow Jones Newswires in an interview.

The market expects fresh cues from Malaysia’s export estimates for the Feb. 1-25 period to be released by cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. Friday, but exports are likely to be a tad lower or might remain unchanged, said two trading executives in Kuala Lumpur.

Malaysia’s palm oil exports during the Feb. 1-20 period fell 3.2% from a month earlier, to 825,180 tons, cargo surveyor Intertek Agri Services said Monday.

If unrest continues in Libya, a key oil producer, U.S. crude could rally further, pulling along prices of palm oil, which is used as a feedstock in biofuels that competes with petroleum diesel, said a second Singapore-based trader.

However, right now people are being cautious. “There are a lot of sellers in the market, but nobody wants to buy until the political situation settles down a bit,” he added.

An executive at a Kuala Lumpur-based brokerage pegged immediate support for BMD Crude Palm Oil (CPO) futures at MYR3,470/ton.

The most active rupiah-denominated crude palm oil contract for May on the Indonesia Commodity & Derivatives Exchange was last trading 4.4% lower at IDR10,285 a kilogram at 1005 GMT.

Many trades were reported in the cash market, with palm olein for April, May, June trading from $1,200/ton to $1,205/ton and July, August, September from $1,135/ton to $1,137.50/ton, free on board Malaysian ports, said a Singapore-based physical market trader.

Cash CPO for prompt shipment was offered MYR130 lower at MYR3,620/ton.

Open interest on the BMD was 109,347 lots versus 111,542 lots Tuesday. One lot is equivalent to 25 tons.

A total of 31,278 lots of CPO were traded versus 29,573 lots Tuesday