CPO FUTURES

PALM oil futures in Malaysia, the global benchmark, advanced as the demand outlook for its use improved following gains in crude oil and soybean oil.

Crude oil rose a second day in New York after OPEC leaders signaled their intention to make deeper supply cuts to bolster prices. Soybean oil, the main rival to palm oil, climbed 1.2 per cent to 34.83 cents a pound in Chicago on Tuesday.

A drop in Malaysian palm oil inventories in December from a record in the previous month, and a surge in exports, aided the rally.

Stockpiles declined 12 per cent to 1.99 million tons, as exports rose 18 per cent to 1.61 million tons, the nation’s palm oil board said January 12.

“Crude palm oil will trade higher because strength is coming back to the industry,” Arhnue Tan, an analyst at ECM Libra Capital, said by phone. “Production is coming down.”

March-delivery palm oil gained 3 per cent to RM1,884(US$527). Yesterday, futures fell 8 per cent, the most since October 24.

Palm oil, used mainly in food, is more resilient to economic downturn than other commodities and “it is reasonable to see an average of RM2,175 this year,” Tan said. The vegetable oil averaged RM1,602 in the fourth quarter and RM2,852 for 2008, according to Bloomberg data.

Malaysian stockpiles may drop to 1.7 million tons, from 2 million at the end of 2008, later in the year, she added.

TIN

THE Kuala Lumpur Tin Market (KLTM) rose by US$400 to close at US$11,600 per tonne yesterday on strong demand, particularly from Europe, dealers said.

The London Metal Exchange, however, fell by US$295 to end at US$11,305 per tonne.

At the opening level of US$11,200, buyers made bids for 170 tonnes, while sellers offered 45 tonnes.

Turnover increased to 100 tonnes from 55 tonnes on Tuesday with Japanese, European and locals dominating trade.

The price differential between KLTM and LME stood at a premium of US$165 compared to a discount of US$185 on Tuesday. - Agencies