Malaysian palm oil ends flat

30 Dec, 2009

Malaysian palm oil futures ended barely changed on Tuesday after earlier gains faded on profit taking and as a firmer US dollar weighed on prices. "Traders were unwilling to take on added risk ahead of the holidays and that kept prices choppy throughout the session," said a trader at a local brokerage in Kuala Lumpur. The benchmark March contract on the Bursa Malaysia Derivatives Exchange closed down 2 ringgit, or 0.08 percent, at 2,590 ringgit ($755) per tonne.
Overall volume was 9,694 lots of 25 tonnes each. Oil held steady below $79 on Tuesday, after hitting a five-week high a day earlier, as a firm dollar offset colder US weather and expectations of a further drawdown in crude inventories. The Malaysian ringgit fell nearly a quarter of a percentage point to around 3.4350 per dollar in thin late morning trade, pulled down by dollar buying by corporate investors to square year-end positions. Most Malaysian palm oil exports are in the form of products, which are priced in US dollars.
Traders expect profit-taking to persist tomorrow ahead of the release of export figures for the full month of December. The data from cargo surveyors is expected to be released on Thursday or next Monday. Trading in the physical market was also thin ahead of the year-end holidays.
"Between buyers and sellers there is quite a distance, about $10," another trader said. The most-active September 2010 soyoil contract on China's Dalian Commodity Exchange inched up 0.38 percent on Tuesday, helped by excess liquidity of funds in China despite ample domestic supply of vegetable oil.
In the Malaysian physical market, palm oil for December and January delivery was traded at 2,540 ringgit per tonne on the southern and central regions. In Indonesia, the state marketing centre based in Jakarta and traders in Medan, home to the country's main palm oil export port of Belawan, did not hold auctions. The market is due to resume auctions from January 4 onwards.

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