Malaysian crude palm oil futures ended down on profit-taking on Thursday, erasing gains, despite official crop data for July that showed a slightly lower growth in palm oil stocks than anticipated.
Dealers had initially expected palm oil contracts on the Malaysia Derivatives Exchange (MDEX) to build on to their morning highs after the data from the government-run Malaysian Palm Oil Board (MPOB).
But MDEX futures saw a selldown instead as players seized the opportunity to book profits on gains made in the week. "Fundamentally, there aren't many reasons for people to go long on this market, so it's just as well that there's some profit-taking," said a trader.
MDEX's third-month contract, October, closed eight ringgit down at 1,408 ringgit ($370.53) a tonne, way off the high of 1,428 achieved after a run-up in Chicago soyaoil prices the previous day.
October palm oil's low for Thursday was 1,401 ringgit. Other traded contracts were also off their highs, closing three to nine ringgits down. Volume was, however, thin at 4,012 lots of 25 tonnes each.
The market usually sees a trade of 6,000 lots on an active day. MPOB put palm oil production in July at 1.27 million tonnes, higher than the 1.23 million tonnes estimated by the market's top forecaster Ivan Wong.
But the crop agency gave a lower closing stock of 1.29 million tonnes for last month, compared with Wong's estimate of 1.32 million tonnes.
It also estimated a higher export number of 1.11 million tonnes, versus Wong's forecast of 1.06 million tonnes.
Physical crude palm oil prices were also down on pressure from futures and scarce shipping activity due to high freight rates and thin demand for oil.
August saw buyers/sellers at 1,470/1,475 ringgit a tonne in Malaysia's southern region, down from Wednesday's close of 1,480/1,485.
The same contract in the central region saw bids/offers at 1,465/1,475 ringgit a tonne. Trades were reported at 1,480-1,470 ringgit in the south and 1,470-1,460 in the central zone.
September was quoted at 1,460/1,470 ringgit in the south and 1,455/1,465 in the central region. Trades were reported at 1,455-1,460 in the south and 1,455 in the central zone.
PALM OIL FUTURES:
August (south): 1475.
Open/High/Low: 1418/1428/1401.
Previous closes: 1485.
PALM OIL PHYSICALS:
October (3rd month): 1408.
Previous settlement: 1416.
FUTURES:
Benchmark third-month October down eight ringgit at 1,408 ringgit ($370.53) a tonne.
PHYSICALS:
August offers down 10 ringgit/tonne.