Crude palm oil futures on Malaysia’s derivatives exchange rose Tuesday tracking tight supply prospects for August, although concerns over weak global economic outlook and U.S. debt continue to keep many investors at bay.
Benchmark October CPO on the Bursa Malaysia Derivatives ended 0.6% higher at MYR3,119 a metric ton.
Although CBOT soyoil closed 0.9% lower Monday at 56.95 cents a pound, a consolidation in the range of 55.00-57.50 cents is under way before a breakout towards the 59c/lb level in coming sessions, a Mumbai-based analyst said.
December e-CBOT soyoil was trading 0.1% higher at 57.01c/lb at 1000 GMT, mostly due to firmer crude oil.
Malaysia’s June CPO output rose 0.7% from May to 1.75 million tons while June exports rose 12% to 1.58 million tons, Malaysian Palm Oil Board said July 11.
Palm oil production could dip in August as many workers will be away for the Ramadan fasting month, although exports will likely remain strong, supporting near-term prices, a Kuala Lumpur-based trader said.
Palm oil’s wide price discount to rival soyoil, now around $150/ton, will also encourage countries such as India and China as well as other price-sensitive buyers to increase palm oil purchases, he said.
India’s June palm oil imports rose over 30% to 738,000 tons, Rabobank said in a research report.
China’s June imports were 513,868 tons, the highest this year, Rabobank said.
The bank doesn’t expect a massive selloff in BMD Crude Palm Oil (CPO) “due to continued support from the CBOT soybean complex.”
It said the 2011-12 stocks-to-use ratio of global vegetable oils is expected to drop below 7%, for the first time in nearly 40 years.
However, prices will likely ease from an estimated average of MYR3,000/ton in the third quarter to MYR2,900 ton in the fourth quarter due to easing supplies, the bank forecast Monday.
The market expects fresh cues from a key CPO production and vegetable oils forecast by leading analyst Dorab Mistry at a symposium in Sydney Thursday.
In the cash market, refined palm olein for October, November, and December was traded at $1,105/ton, free on board Malaysian ports, a Singapore-based physical broker said.
Traded volume on the BMD fell to 12,932 lots from 27,685 lots Monday. One lot is equal to 25 tons.
Open interest in crude palm oil futures on the BMD reached 133,648 contracts compared with 133,671 contracts Monday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1030 GMT: Month Close Previous Change High Low Aug'11 3,117 3,097 Up 20 3,120 3,075 Sep'11 3,119 3,099 Up 20 3,125 3,096 Oct'11 3,119 3,100 Up 19 3,126 3,095 Nov'11 3,119 3,097 Up 22 3,125 3,094
-By Surabhi Sahu, Dow Jones Newswires; +65 6415 4086; surabhi.sahu@dowjones.com
(END) Dow Jones Newswires
July 26, 2011 06:53 ET (10:53 GMT)
Copyright (c) 2011 Dow Jones & Company, Inc.
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