Asian Crude Palm Oil Ends Up; Output, Stocks Likely Lower

KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange ended up Wednesday as crude oil rebounded and as market sentiment improved on price-supportive supply-demand fundamentals, trade participants said.

The benchmark April CPO contract on the Bursa Malaysia Derivatives ended MYR46, or 1.9%, higher at MYR2,498 a metric ton after moving in a MYR2,475-MYR2,505/ton range.

The contract opened higher on short covering before rising above the psychological MYR2,500 level to hit MYR2,505 in the afternoon session, its highest level in two weeks.

"Speculators are expecting the Malaysian Palm Oil Board to issue bullish data next week and many among them have built up longs," a Malaysia-based exporter said.

The MPOB is expected to issue data on January exports, output and end-month stocks on Feb. 10.

Prices also extended gains after IOI Corp. Executive Director Lee Yeow Chor said Malaysia is likely to register lower output in February and March due to floods and rains in Sabah.

Lee said prices may rise to MYR2,500-MYR2,700/ton in the next three months due to lower output and stronger exports.

Lower output may reduce Malaysia's palm oil inventories to less than 2 million tons from a 13-month high of 2.24 million tons at end-December.

Cargo surveyors estimated January palm oil exports around 1.48 million-1.50 million tons.

At 0955 GMT, light, sweet crude for March delivery on the New York Mercantile Exchange was trading 70 cents higher at $77.93 a barrel. Crude oil rose as much as 81 cents or 1% to $78.04 in Asian trade.

In the cash market, palm olein for April/May/June traded higher at $757.50/ton and $760/ton, free on board Malaysian ports, said a Singapore-based trader.

Cash CPO for prompt delivery was offered MYR40 higher at MYR2,520/ton.

Open interest on the BMD was 73,085 lots, down from 74,332 lots traded Tuesday. One lot is equivalent to 25 tons.

A total of 19,583 lots of CPO were traded versus 14,734 lots Tuesday.

Closing BMD CPO futures prices in MYR/ton at 1000 GMT:

Month Close Previous Change High Low
Feb 2010 2,527 2,463 Up 64 2,527 2,485
Mar 2010 2,499 2,458 Up 41 2,510 2,479
Apr 2010 2,498 2,452 Up 46 2,505 2,475
May 2010 2,495 2,449 Up 46 2,505 2,475

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

(END) Dow Jones Newswires
02-03-10 0534ET
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