Malaysia's CPO futures higher despite bearish June exports, inventory data

Crude palm oil (CPO) futures contracts traded on the Malaysia Derivatives Exchange were broadly higher Wednesday despite bearish June export data and inventory level as traders expect global demand for palm oil to remain strong over the longer term.
At 4.01 pm, the benchmark contract for September delivery rose 53 ringgit to 2,583 and spot month July contract added 54 ringgit to 2,674.

Malaysia's palm oil exports for June fell 18.1 percent month-on-month to 943,521 metric tons, the Malaysian Palm Oil Board (MPOB) said Tuesday.

Total stock of crude palm oil rose 5.0 percent to 516,543 metric tons from 492,149 metric tons in May, the MPOB said.

`Despite lower export numbers, we believe Chinese demand for palm oil remains brisk,` Hwang-DBS Vickers Research said in a note to clients.

Lower exports to the European Union and China had been partly offset by higher exports to India and Pakistan, it said.

China and India are the two major buyers of Malaysian palm oil.

`Demand for palm oil is still there, it's just that people don't want to buy at current levels,` Kok Chee Leong, a futures dealer at CIMB Investment Bank, said.

`The continued drop in soya bean acreage in the US is also providing support over the longer-term,` said Hwang-DBS.

CPO prices are expected to trade between 2,300 ringgit and 2,500 ringgit for the remainder of the year, it said.

The brokerage said it has raised its CPO price forecasts for 2007 to 2009 by 9.5-15 percent.

It said it now expects average CPO price for 2007 and 2008 to reach 2,300 ringgit, compared to its previous forecast of 2,100 ringgit.

For 2009, the average CPO price is expected to be maintained at 2,300 ringgit, compared to the previous forecast of 2,000 ringgit, said Hwang-DBS.

(1 US dollar = 3.44 ringgit) aipeng.soo@thomson.com as/jg COPYRIGHT Copyright AFX News Limited 2007. All rights reserved.

Sumber: sharewatch.com