Crude palm oil futures on Malaysia's derivatives exchange pulled back Monday from their highest level in nearly two months, weighed by disappointing export demand and concerns that palm oil stock levels in December will remain up.
The benchmark March contract on Bursa Malaysia Derivatives ended 2.6% lower at 2,433 ringgit a metric ton after rising as much as 0.8% to MYR2,517/ton.
Palm oil ended the year 25% lower, weighed by rising palm oil stocks as sluggish global economic growth affected commodity demand.
Malaysian palm oil exports in December declined 5.7% from the previous month to 1.57 million tons, according to an estimate by cargo surveyor Intertek Agri Services. Another surveyor, SGS (Malaysia) Bhd., put the figure at 1.52 million tons, down 7.9% from November.
The weaker exports were driven mainly by a slump in shipments to major palm oil consumer China, a result of uncertainty over China's new quality control measures that will come into effect Tuesday, Malaysian exporters said. China's Inspection and Quarantine Bureau said it won't accept imports of edible oils containing too much peroxide or stearic acid.
"China is the biggest client of Malaysian palm oil, buying at least 300,000 tons each month. If refiners aren't able to export refined oils to China, [palm oil] stocks could stay above 2.5 million tons the next few months," despite weather-related supply disruptions in parts of oil-palm growing regions in Malaysia, a vegetable oil refiner in the southern state of Johor said.
Malaysia's weather office said in an advisory Monday that heavy rainfall is expected over several oil-palm growing states, which could cause flooding in low-lying areas.
In the cash market, refined palm olein for January shipment was offered at $800/ton, while cash CPO was offered at MYR2,300/ton.
Open interest on the BMD was 167,441 lots versus 166,198 lots Friday. One lot is equivalent to 25 tons.
A total of 43,399 lots of CPO were traded versus 32,989 lots Friday.
Ending BMD CPO futures prices in MYR/ton: Month Close Previous Change High Low Jan'13 2,320 2,367 -47 2,370 2,305 Feb'13 2,400 2,451 -51 2,470 2,391 Mar'13 2,433 2,497 -64 2,517 2,433 Apr'13 2,482 2,542 -60 2,561 2,472