Crude palm oil futures on Malaysia's derivatives exchange fell Tuesday, as investors booked profits after Monday's 1.9% gain.
The benchmark May contract at Bursa
Malaysia Derivatives ended 0.6% lower at 2,399 ringgit a metric ton
after moving in the tight range of MYR2,389/ton-MYR2,428/ton.
Trading volumes were thin as investors
kept to the sidelines ahead of Wednesday, when vegetable oil analysts
Dorab Mistry and James Fry are expected to give their price outlook
forecasts at a palm and laurics oil conference in Kuala Lumpur that
kicked off this week, market participants said.
Traders are also keeping an eye on
Malaysia's palm oil production, inventories and exports data for
February from industry regulator Malaysian Palm Oil Board as well as
March 1-10 palm oil shipments data from cargo surveyors Intertek Agri
Services and SGS (Malaysia) Bhd. due next week, they said.
Stockpiles in Malaysia have risen to
record levels in the past year as the weak economic outlook dampened
demand for the tropical oil.
Inventories in Malaysia, the world's second largest palm oil producer, rose to an all-time high of 2.63 million tons in January.
"Malaysia and Indonesia may need to find
[new markets] for palm oil in order to take up the slack caused by
increased CPO supply and lower biodiesel usage," Singapore-based Chris
de Lavigne, the global vice president of consulting in industrial
practice at Frost & Sullivan, said at an industry conference. "Until
then, prices could see a mini slump in 2013."
Still, port closings in the state of
Sabah--Malaysia's biggest palm oil growing region--caused by a standoff
between security forces and armed Filipino followers of a Muslim clan
leader, will likely support palm oil prices, trading executives said.
"The palm oil ports of Sahabat, Tawau and
Kunak have shut down after the clashes [in Sabah's coastal town of
Lahad Datu]," a shipping executive at a Kuala Lumpur-based surveyor firm
said. "Prolonged port closures will leave exporters with little choice
but to divert their shipments to other ports, delaying deliveries to
consumers."
In addition to port closures, some of the
refineries are also temporarily shutting down operations until the
violence ebbs while others are evacuating plantation workers amid the
clashes, market participants said. This could curb production in the
interim, limiting supplies and supporting prices, they added.
Meanwhile, in the cash market, refined
palm olein was offered at $815/ton, free on board Malaysian ports, said a
Singapore-based physical market broker.
Open interest on the BMD was 165,744 lots versus 162,542 lots Monday. One lot equals 25 tons.
A total of 19,877 lots of CPO were traded versus 36,692 lots Monday.
Ending BMD CPO futures prices in MYR/ton:
Month Close Previous Change High Low
Mar'13 2,392 2,400 -8 2,392 2,390
Apr'13 2,389 2,405 -16 2,407 2,386
May'13 2,399 2,413 -14 2,428 2,389
Jun'13 2,408 2,423 -15 2,435 2,402
