KUALA LUMPUR, May 10: Malaysian crude palm oil futures closed up on Tuesday after friendly export numbers, but a much anticipated rally did not materialise as players worried about steadily rising production. The main surveyor of Malaysian oil palm cargoes, Societe Generale de Surveillance (SGS), said it tracked a 29 per cent rise in shipments for the first 10 days of May versus the corresponding period of April.
The market had been expecting a rise of only about 15 per cent. The bullish export estimate was, however, offset by official production figures for April showing a record output of 1.25 million tons after an almost similar feat in March.
This is a very high production, and people are worried that it is coming at a time which is not even the peak production period for Malaysian palm oil,” said a trader. At this rate, what’s going to happen when we enter the traditionally high production months of June and July?
The benchmark third-month palm oil contract on Bursa Malaysia Derivatives, July, closed up 7 ringgit, or 0.5 per cent, at 1,429 ringgit a ton ($376.05). Dealers had initially expected the contract to breach the key psychological resistance of 1,450 ringgit. But it came nowhere near, stopping at a peak of just 1,436 ringgit.
Other traded months settled up 6 ringgit. Daily trade amounted to 4,259 lots of 25 tons each. The market usually sees about 6,000 lots or more on a hectic day.
Dealers said prices still had potential to touch 1,450 ringgit if exports continued to expand at the current rate. SGS’s next export estimates will be for May 1 to 15.
In the physical crude palm oil market, May and June contracts saw bids at 1,435 ringgit a ton, against offers at 1,440 in Malaysia’s southern region. Bids/offers for central region were at 1,430/1,435 ringgit. Trades were reported at 1,432.50-1,435 ringgit a ton in the southern region and 1,435-1,430 in central. —Reuters
