Business Times Palm futures rally to six-month high

Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives ended on a six-month high yesterday on market talk that end-March palm oil stock is going to be lower than expected, dealers said.

"The stock is expected to be lower than 1.4 million tonnes, which fuelled sentiment of a possible a squeeze in global vegetable oil supply," said one of the dealers.

Malaysia is the world's second biggest palm oil producer, after Indonesia.

The Malaysian Palm Oil Board will release palm oil stock, production and export figures tomorrow.

Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will also release their first 10 days of April export figures.

"The market is fundamentally and technically steady," the dealer said.

At close of trading today, the CPO futures contracts for April 2009 jumped RM129 to RM2,410 per tonne, May 2009 rose RM140 to RM2,370 per tonne, June 2009 went up RM104 to RM2,269 per tonne and July 2009 added RM101 to RM2,219 per tonne.

The day's volume amounted to 18,618 lots, up from yesterday's 11,886 lots, while open interests declined to 86,762 contracts from 88,461 contracts previously.

As for the physical market, the CPO for April shipments in the southern region was higher at RM2,420 per tonne compared with RM2,280 per tonne previously.

An AMResearch Bhd report said that there “is a possibility that palm oil inventory could touch a low of 1.3 million tons by the year-end,” from a record 2.27 million tons in November.

The report also said a weak U.S. dollar would support higher palm oil prices, raised its average forecast by 25 per cent to RM2,500 a ton this year, and 17 per cent to RM2,700 for 2010. Palm oil has averaged RM1,928 a ton this year.

Chin’s comment “is adding to the buoyancy,” Ben Santoso, an analyst at DBSVickers Securities, said. Malaysia’s palm oil board may announce monthly data tomorrow or on April 13.