Asian Crude Palm Oil Ends Down 1.2% On Weak Exports

KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives exchange fell Thursday, moving against the
grain among commodities after the U.S. Federal Reserve said it would keep interest rates ultralow at least until late
2014, as investors focused on bearish palm oil export data.

The benchmark April contract on the Bursa Malaysia Derivatives ended 1.2% lower at MYR3,131 a metric ton after moving
between MYR3,127 and MYR3,165.

Palm oil's downward momentum may extend into the next session, "particularly with the stronger ringgit and anemic
demand," S. Paramalingam, executive director at Kuala Lumpur-based brokerage Pelindung Bestari Sdn. Bhd. said.

The strengthening Malaysian currency, driven by the dollar's broad declines against regional currencies, makes
ringgit-denominated crude palm oil more expensive for vegetable oil manufacturers who use the cooking oil to make a wide
variety of consumer products. The dollar is trading at MYR3.0400 compared with Wednesday's level of MYR3.0755 and
Tuesday's MYR3.1050.

Cargo surveyor Intertek Agri Services estimated exports during the Jan. 1-25 period at 981,275 tons, down 17%, while
SGS (Malaysia) Bhd. put exports at 947,401 tons, down 20%.

"The lineup of vessels waiting to load palm oil [at Malaysian ports] is poor," indicating demand may remain weak for
the rest of the month, said a shipping executive based in Penang.

Trading executives said Malaysian exports are weakening as buyers shift purchase orders to top producer Indonesia due
to lower export taxes.

"Malaysian palm oil is facing stiff competition from the Indonesians," Paramalingam said.

Indonesia reduced its export tax on refined palm products in August, which allowed Indonesian refiners to sell their
products at a steep discount compared with counterparts in Malaysia.

In the cash market, refined palm olein for February was offered at $1,070/ton, with April/May/June at $1,065/ton,
free-on-board Malaysian ports, a Singapore-based broker said.

Open interest on the BMD was 107,172 lots, versus 109,854 lots Wednesday. One lot is equivalent to 25 tons.

A total of 17,860 lots of CPO were traded versus 9,265 lots Wednesday.

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

Month Close Previous Change High Low
Feb'12 3,138 3,172 -34 3,149 3,138
Mar'12 3,137 3,171 -34 3,161 3,135
Apr'12 3,131 3,169 -38 3,165 3,127
May'12 3,126 3,158 -32 3,149 3,120

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

(END) Dow Jones Newswires
01-26-12 0555ET
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