09/06/2011 (Palm Oil HQ) - Crude palm oil futures on Malaysia’s derivatives exchange extended declines Wednesday as investors made bearish bets ahead of key production and stock data due at the end of the week.

Prices also fell due to broad-based weakness in commodity markets, market participants said.

Benchmark August CPO on the Bursa Malaysia Derivatives ended 1.1% lower at MYR3,316 a metric ton, after tumbling to MYR3,313/ton, the lowest since May 18.

Traders and planters estimated that end-May stocks rose to a 16-month high of 1.75 million-1.80 million tons, amid a seasonal rise in production.

“Demand in the coming months should be robust, although I’m not sure if it will outstrip production,” said a commodities trader in Singapore.

CPO output in Malaysia may rise to 18 million tons in 2011 after two consecutive years of declines, analysts and planters said. Last year, CPO output reached 17 million tons, compared with 17.6 million tons in 2009.

State-linked Malaysian Palm Oil Board is scheduled to issue May output, stock and export data Friday. Surveyors Intertek Agri Services and SGS (Malaysia) Bhd. are expected to release export figures for the June 1-10 period later this week.

Separately, major grain processors in China said the government hasn’t removed price caps on cooking oil sales, even though the caps–initially imposed around November and extended in April to fight inflation–expire this month.

“China generally buys more palm oil as summer approaches, although a removal of price caps may encourage [Chinese] importers to buy more,” said a Singapore-based broker.

Leading agribusiness researcher OilWorld estimated China’s palm oil imports will reach 1.8 million tons in the July-September period.

Rupiah-denominated palm oil for August on the Indonesia Commodity & Derivatives Exchange was trading 0.4% lower at IDR9,620 a kilogram.

In the physical market, refined palm olein for July was traded at $1,190/ton, August, September at $1,172.50/ton and $1,170/ton.

October, November, December changed hands at $1,152.50/ton; January, February, March shipments at $1,152.50 and $1,155/ton; April, May, June at $1,155/ton and $1,156/ton, free on board Malaysian ports, said a Singapore-based physical market broker.

Cash CPO for prompt shipment was offered MYR40 lower at MYR3,360/ton.

Trade on the BMD reached 19,756 lots, compared with 19,470 lots Tuesday. One lot equals 25 tons.

Open interest reached 112,542 lots, compared with 110,655 lots Tuesday.

Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1030 GMT:

Month          Close          Previous          Change          High          Low
Jun'11         3,335           3,373                Down 38        3,354        3,335
Jul'11           3,340           3,371                Down 31        3,363       3,327
Aug'11         3,316           3,354                Down 38        3,350       3,313
Sep'11         3,313          3,352                 Down 39        3,370       3,309