KUALA LUMPUR, May 15: Malaysian crude palm oil futures fell 1.8 per cent on Tuesday as players booked profits after strong gains that pushed the market to near-nine year highs.
Dealers said the market was unlikely to decline sharply as it was supported by a supply squeeze and robust vegetable oil demand.
The benchmark third-month July contract on the Bursa Malaysia Derivatives Exchange finished down 43 ringgit, or 1.8 per cent at 2,346 ringgit ($690) a ton, after hitting a low of 2,328 ringgit.
Given the sporadic profit taking, fundamentals of short supply and export demand are still strong, so prices will not drastically fall. Some traders said a slight decline in exports announced by cargo surveyors could be a cause for concern. There is some concern in the market because palm exports were slightly down, said another trader.
But in physical market, prices remained high due to a shortfall in supplies, traders said.
The palm oil market gained more than 17 per cent this year after surging 40 per cent in 2006 on the back of demand from the biodiesel and food sectors.
Malaysian Palm Oil Board said the country's April closing stocks fell 11.65 per cent to 1,181,320 tons, the lowest in almost three years.
The board said palm oil output in April rose 4.11 per cent, less than expected and exports showed a steady growth of 5.9 per cent. Exports of Malaysian palm oil products between May 1 and 15 fell 4.5 per cent to 637,090 tons from 666,793 tons shipped between April 1-15, according to cargo surveyor Intertek Testing Services.
In the physical market, crude palm oil for May shipment in the southern region was quoted at 2,480/2,500 ringgit a ton. Deals were done between 2,480 and 2,500 ringgit a ton.—Reuters
