Crude palm oil futures on Malaysia's
derivatives exchange ended lower Tuesday as fears over uncertainty in
Europe dented investor sentiment and sparked profit-taking in regional
equities and commodities.
The benchmark April contract on Bursa
Malaysia Derivatives ended 0.7% lower at 2,549 ringgits a metric ton,
after moving in a MYR2,534-MYR2,556/ton range.
Fears about inclement weather in major
soybean growing regions in Argentina and expectations for improving palm
oil exports prevented further falls, a Kuala Lumpur-based trading
executive said.
"Worries about political instability in
Spain and Italy presented an opportunity for investors to lock in gains
after palm oil's rally the past few sessions," the Kuala Lumpur-based
executive said, noting that palm oil's broad price discount of over
$300/ton to rival soyoil was also supportive.
Former Italian Prime Minister Silvio
Berlusconi said he will scrap the current conservative fiscal policy if
re-elected, while in Spain, Prime Minister Mariano Rajoy is facing
allegations of having received cash payments.
Scorching heat and limited rainfall in
Argentina raised concerns that the major soybean exporter may not
produce the expected bumper crop that would help ease global supply
tightness.
The supply concerns have driven up prices, making it more expensive to price-sensitive vegetable oil buyers.
Palm oil exports could improve in coming
months, driven mainly by Malaysia's move to revamp its existing export
duty structure as part of a plan to improve competitiveness and grab
back market share from top producer Indonesia.
"Malaysia's [export tax] changes will aid
refiners in the country as margins will improve," said Lee Yeow Chor,
chairman of the Malaysian Palm Oil Council, the industry's marketing
arm.
The council also forecasts higher shipments to emerging markets such as Myanmar and Iran as food consumption rises, he said.
Market participants cautioned that palm
oil futures could turn choppy in coming days as investors may move to
the sidelines ahead of the Lunar New Year holidays.
In the cash market, refined palm olein for February was offered at $840/ton, while cash CPO was offered at MYR2,450/ton.
Open interest on the BMD was 170,869 lots, versus 167,015 lots Monday. One lot is equivalent to 25 tons.
A total of 28,536 lots of CPO were traded versus 32,005 lots Monday.
Ending BMD CPO futures prices in MYR/ton:
Month Close Previous Change High Low
Feb'13 2,481 2,496 -15 2,495 2,476
Mar'13 2,528 2,539 -11 2,530 2,513
Apr'13 2,548 2,566 -18 2,556 2,534
May'13 2,564 2,585 -21 2,575 2,553
