CPO FUTURES
PALM oil futures dropped for the first time in six days yesterday after a rally to the highest price in more than three months prompted speculation that some buyers may be deferring purchases.
October-delivery futures fell 0.3 per cent to close at RM2,562
a metric ton on the Malaysia Derivatives Exchange in Kuala Lumpur. Prices had gained 3.9 per cent in the five days to Monday’s close, which was the highest since April 9.
“There’s a bit of profit-taking after the recent rally and some buyers might be put off by the high prices,” said Ivy Ng, an analyst at CIMB Investment Bank Bhd.
“Palm oil has been riding on the strength of external markets, like crude oil and soybeans, and we may witness some volatility in coming days.”
Palm oil has rebounded from a seven-month low on July 7 on speculation demand may rise in Asian countries and as the La Nina weather event may hurt output in the biggest producers.
China, India, Pakistan and Indonesia mark festivals in the quarter ending September 30, typically stoking edible-oils demand. Palm oil has also risen with crude oil, soybeans and equities.
November-delivery soybeans reached US$10.295 a bushel in intraday trade in Chicago Monday, the highest level for a most-active contract since January 11, as drought slashed grain output in Russia and parts of Europe. In July, the oilseed jumped 11 per cent, the steepest monthly gain since May 2009.
Crude oil traded near a three-month high today after breaching US$81 a barrel for the first time since May as the outlook for the global economy improved.
Oil for September delivery traded at US$81.17 a barrel at 5.25 pm Singapore time.
“Most people expect palm oil production in Malaysia to be less than forecast because of weather,” CIMB’s Ng said. “If production turns out to be better, that will boost supplies and lead to a correction in prices.”
La Nina, which causes higher-than-normal rainfall in Asia, can disrupt palm oil production in Indonesia and Malaysia, the two top growers, and cause dry weather in North America, hurting soybean crops. Palm and soybean oils are substitutes and account for more than 60 per cent of global edible oils supply.
Development of La Nina will be a bullish factor for palm oil prices should the wet weather last until the end of this year or early next year, Standard & Poor’s said in a report Monday.
Palm oil may trade between RM2,400 and RM2,600 a ton over the rest of the year because of good demand and low stockpiles, it said.
December-delivery soybean oil fell as much as 1 per cent to 40.77 cents a pound after jumping 1.5 per cent Monday. The vegetable oil’s premium over palm oil rose to US$94.29 a ton from US$93.88 yesterday, according to Bloomberg data.
CME Group Inc’s October-delivery palm oil contract, pegged to the Malaysian benchmark price, dropped 0.1 per cent to US$805.50 a ton.
On the Dalian Commodity Exchange, January-delivery palm oil ended 0.1 per cent lower at 6,900 yuan a ton, while soybean oil rose 0.1 per cent to 7,846 yuan a ton.
RUBBER
THE Malaysian rubber market closed higher yesterday in tandem with the strong futures contract prices on the Tokyo Commodity Exchange that climbed to a five-week high, dealers said.
This followed rallies in crude oil and global equities, a dealer said.
He said limited supplies in producing countries also aided the rubber market as countries like Indonesia were entering the dry season while Thailand was hit by unseasonal rains.
At noon, the Malaysian Rubber Board official physical price for tyre grade SMR 20 rose 6.5 sen to 936.5 sen per kg and latex in bulk went up 2.5 sen to 698.5 per kg from 696 sen previously.
The unofficial physical price for SMR 20 gained six sen to 939 sen per kg from 933 sen Monday while latex in bulk went up two sen to 699 sen per kg from 697 sen previously.
TIN
THE Kuala Lumpur Tin Market (KLTM) closed on a firm note yesterday with the price up US$130 to end at US$19,630 per tonne following the commodity's uptrend on the London Metal Exchange (LME), dealers said.
They said the players, however, were cautious due to the speedy uptrend in the market.
A dealer said the uptrend was likely to continue throughout the week.
The KLTM price rose in tandem with the LME's, which saw the metal up by US$375 to close US$19,880 a tonne.
Turnover, however, fell to 85 tonnes from 111 tonnes Monday.
At the opening bell, buyers bidded for 110 tonnes, while sellers offered 30 tonnes, with European, Japanese and local traders dominating the market.
Meanwhile, the price differential between the KLTM and LME narrowed to a premium of US$105 a tonne compared with US$350 on Monday. -- Agencies
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