Tuesday November 21, 2006

21/11/06 (The Star) -  PETALING JAYA: Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives rallied to close above the RM1,800 mark – the highest in about 2½ years – on speculative buying interest buoyed by higher soy bean prices on the Chicago Board of Trade and China market.

Both the January and February CPO contracts closed RM100 higher at RM1,850 and RM1,864 a tonne respectively while spot month November South CPO settled at RM1,815 versus RM1,725 on Friday.

“The significant increase in the CPO prices to above RM1,700 over the past two weeks is fundamentally driven by external factors,'' a trader said. “There are growing concerns over whether supply is sufficient, especially when the commodity is sought after for both food and fuel uses.”

He expects CPO to trade between RM1,800 and RM1,880 a tonne in the next two weeks, riding on the continued growing demand and potential supply tightening given the unusually heavy rain pattern this year.

Market cargo surveyor Intertek Testing Services said yesterday that exports of Malaysia's palm oil products in the first 20 days of November fell 14.8% to 834,065 tonnes from 979,224 tonnes last month.

Argentina, the world's second largest corn exporter, announced last Friday that it will suspend new orders for corn exports from Nov 20 to curb rising inflation at home. 

“It is not uncommon for importers to switch to CPO should other vegetable oils like corn, soy bean and rapeseed crops register poor harvest due to bad weather or if there are trade restrictions,” a dealer said.

He expects CPO prices to increase further as a result of the latest development in Argentina and continued strong demand from major buyers of local CPO from China and India.

Argentina's Agriculture Secretary Miguel Campos said the halt on new requests by exporters to sell corn abroad in the coming season would allow the government to audit existing orders for 10.5 million tonnes.

He cited concerns that international demand would limit the domestic corn supply and lead to higher prices for Argentine consumers and livestock producers.

Separately, United Plantations Bhd posted a higher net profit of RM49.9mil for the third quarter ended Sept 30 compared with RM38.4mil in the previous corresponding period.

Turnover also increased to RM181.6mil from RM154.9mil previously. Pre-tax profit for the quarter rose to RM66.8mil versus RM53.5mil a year ago.