Crude palm oil futures on Malaysia’s derivatives exchange ended lower Wednesday, pressured by an improved weather outlook for rival soy crops in South America.
The benchmark April contract at Bursa Malaysia Derivatives ended 2.2% lower at 2,504 ringgit a metric ton after moving in a MYR2,504-MYR2,558 range.
Losses in CBOT soyoil due to improving South American crop prospects dragged values lower, market participants said, although they noted that easing palm oil stockpiles in Malaysia, the world's no. 2 producer, and improving export demand provided some underlying support.
CBOT March soyoil is down 0.5% at 50.83 cents a pound in screen trade.
Data from industry regulator the Malaysian Palm Oil Board showed that stockpiles at the end of January eased 1.9% to 2.58 million tons, well below December's all-time record of 2.63 million tons. It also said CPO production in January fell 10% on month to 1.60 million tons.
" Improving export demand in February and expectations for another low production month could further reduce stockpiles to 2.50 million tons [by the end of February]," a trading executive at a Kuala Lumpur-based foreign commodities brokerage said.
On Saturday, cargo surveyor Intertek Agri Services said palm oil shipments in the first 10 days of February from Malaysia rose 18% to 440,830 tons. Another surveyor, SGS (Malaysia) Bhd., earlier said outbound sales for the same period surged 25% to 429,070 tons.
" Vessel line-up [at Malaysian ports] is decent," a shipping executive in Kuala Lumpur said, tipping overall exports in February to be higher thanks to increased shipments to major palm oil consuming countries China and India.
Trading volumes, however, were subdued as many investors and refiners are still away from their desks after the extended Lunar New Year weekend.
A total of 18,873 lots were traded compared with the usual 25,000-30,000 lots. Volume was 18,142 lots Friday. One lot is equivalent to 25 tons.
Open interest on the BMD was 175,403 lots versus 177,268 lots Friday.
In the cash market, refined palm olein for March shipment was offered around $855/ton, free on board Malaysian ports, said a Singapore-based physical market broker.
