Crude Palm Oil Future Asian Eases On Profit-Taking External Cues

Crude palm oil futures on Malaysia's derivatives exchange eased Tuesday on profit-taking driven by weakness in overseas markets
and a firm dollar.

CPO futures held steady above the psychological level of MYR3,000 a metric ton, however, as production growth in October is likely to be weaker than earlier expected.

The benchmark January contract on the Bursa Malaysia Derivatives ended MYR18 lower at MYR3,053 a metric ton, after hitting a fresh 27-month high Monday at MYR3,084/ton, the highest level since July 28, 2008.

"October's production isn't likely to rise as sharply as previously thought, so fundamentals are still supporting the upside," said a vegetable oils exporter in Johor.

Prices may rally to resistance at MYR3,100/ton in the next trading session. he said.

Many trade participants have forecast an increase in October production of 5%-8% from the previous month, down from previous forecasts around 7%-15%.

September CPO production reached 1.56 million tons, according to data from the state-owned Malaysian Palm Oil Board.

"The correction in CPO prices is shallow and temporary. Any production
shortfall may induce buyers to buy more to fulfill export obligations," said a Singapore-based trading executive.

December soyoil futures on the Chicago Board of Trade futures had fallen 14 points in electronic trading to 49.33 cents a pound as of the end of trade on BMD.

In the physical market, trade was subdued with few trades reported, a
Singapore-based physical market broker said.

Palm olein cargoes for November were offered $5 lower at $1,020/ton.
Cash CPO for prompt shipment was offered MYR20 lower at MYR3,060/ton.

The most-active January rupiah-denominated CPO contract on the Indonesia Commodity and Derivatives Exchange was trading around 0.9% lower at IDR8,805/ton. The dollar-denominated January CPO contract on Globex was trading at $982/ton, down $6 from Monday's close.

Open interest on the BMD was 69,446 lots compared with 68,781 lots Monday, while 14,988 lots of CPO were traded compared with 19,159 lots. One lot is equivalent to 25 tons.