Wednesday, February 6, 2013

Rangebound Ahead of Lunar New Year Holiday Asian Crude Palm Oil Ends Flat

Crude palm oil futures on Malaysia's derivatives exchange were little changed Wednesday, as investors reduce risk ahead of the Lunar New Year holiday and industry data that are due to be released next week.
The benchmark April contract at Bursa Malaysia Derivatives ended 1 ringgit lower at MYR2,547/ton a metric ton, after see-sawing between positive and negative territories.
Concerns about weather in major soy-growing areas of South America eased slightly following forecasts for possible rains early next week, driving prices of soyoil and rival palm oil lower during Asian hours.
The overall technical trend continues to point downward for palm oil for the rest of the week, an analyst at a foreign commodities brokerage said, noting that investors are widely expected to square off positions and move to the sidelines ahead of the Lunar New Year public holidays on Feb 11-12.
"I'm not expecting any significant moves in either direction next week, as the derivative exchange has imposed special trading margins ahead of the Lunar New Year holiday," a Kuala Lumpur-based broker said, noting that the new rates are being imposed to reduce volatility when the market reopens on Feb 13.
Market participants will be looking forward to January crop data by industry regulator, the Malaysian Palm Oil Board, due Feb. 13, where stockpiles are tipped to ease a tad from December's all-time high of 2.63 million tons, as export demand recovered.
Inventories likely reached 2.60 million tons, a modest 1.1% drop from a month earlier while overall palm oil output probably fell 15% to 1.51 million tons, in line with seasonally lower yields and as heavy rain slowed harvesting activities.
Palm oil production in Southeast Asia usually peaks in the July-October period, before oil palm trees rest and yields drop from November onward.
Open interest on the BMD was 174,578 lots, versus 170,869 lots Tuesday. One lot is equivalent to 25 tons.
A total of 29,055 lots of CPO were traded versus 28,536 lots Tuesday.
Ending BMD CPO futures prices in MYR/ton: 
Month   Close  Previous  Change   High    Low 
Feb'13  2,469     2,481     -12  2,475  2,465 
Mar'13  2,524     2,528      -4  2,531  2,508 
Apr'13  2,547     2,548      -1  2,553  2,529 
May'13  2,565     2,564      +1  2,568  2,548 

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