11/05/2011 (The star) - Crude palm oil (CPO) futures on Bursa Malaysia Derivatives (BMD) continued to close on a positive note despite the higher palm oil production and stock figures for April released by the Malaysian Palm Oil Board (MPOB) yesterday.

The three-month benchmark July contract settled RM20 higher at RM3,258 per tonne as market sentiment was boosted by anticipation of better export outlook in the coming months and higher crude oil prices.

Palm oil stocks jumped from 1.61 million tonnes in March to 1.67 million tonnes in April the highest in six months following higher production at 1.53 million tonnes in April (March: 1.41 million tonnes)

Exports for April rose to 1.33 million tonnes the highest in five months from 1.24 million tonnes a month earlier, said MPOB.

Malaysia Estate Owners Association president Boon Weng Siew told StarBiz the CPO price was expected to be traded between RM3,000 and RM3,500 per tonne for the rest of this year.

“While MPOB's latest stats may show higher stocks and production, I believe there will be continued demand, with China recently pledging to continue to buy palm oil.

“India will also start to replenish its CPO supply in June-July with the coming month of Ramadan and also Eid-Fitri festival in August,” he added.

He also pointed out the Government's B5 biodiesel programme (blending of 5% biofuel with 95% fossil fuel) which will start in stages from next month.

“In the early stages, it will be good to see at least 100,000 to 200,000 tonnes of CPO taken up for the B5 programme compared with the targeted 500,000 tonnes mark.

“This will help to further reduce our current high palm oil stocks, thus stabilising our CPO price above RM3,000 per tonne level,” said Boon.

The current CPO price at RM3,258 is currently trading 17.6% lower against its peak at RM3,955 per tonne on Feb 11.

Independent cargo surveyor Intertek yesterday reported that shipments of palm oil from Malaysia rose 16.6% to 323,655 tonnes in the first 10 days of May from a month earlier.

However, another cargo surveyor Societe Generale de Surveillance said shipments fell 1% to 323,664 for the period under review.

Meanwhile, Bursa Malaysia Derivatives (BMD) has hit an all-time high for its CPO futures (FCPO) open interest at 112,921 contracts on May 9 surpassing the previous record of 111,897 contracts on Feb 18.

BMD in a statement yesterday said the increase of open interest was indicative of sustained growing interest in FCPO contracts by market players predominantly from Malaysia, the US, Europe and Singapore.

An increase in participation of institutional traders to 42% following its migration to the US-based CME Globex trading platform in September last year compared with 38% before the migration, it added.