CPO FUTURES

PALM oil futures in Malaysia yesterday declined for a fifth day on speculation that orders from India, the second-largest buyer, may slow after the country built up record stockpiles of cooking oils.

“With reserves in India at the current level, export numbers in the second half of 2009 may see significant weakening,” ECM Libra Investment Research said in a report yesterday.

August-delivery palm oil on the Malaysia Derivatives Exchange dropped as much as 2.4 per cent to RM2,460 a metric ton, and traded at RM2,462 at 4.33 pm The contract has fallen from a high of RM2,651 on June 2.

Data from surveyor Societe Generale de Surveillance on June 1 showed exports to India from Malaysia, the second-largest producer, fell 26 per cent in May from a month earlier, after a 94 per cent gain in April. The next set of data is due June 10.

India may slow imports after domestic stockpiles surged, Govindlal G. Patel, director of Dipak Enterprise, said on June 2.

The country’s cooking oil reserves probably climbed 55 per cent to 1.7 million tons in the seven months ended May, exceeding normal levels of 1.1 million tons, Patel said.

Palm oil has surged about 46 per cent this year as soybean crops declined in Brazil and Argentina, and soybean stockpiles in the US are forecast to reach a five-year low. Palm oil competes with soybean oil for applications in food and biofuel.

Palm oil for September delivery in Dalian, China closed 1.1 per cent lower at 6,808 yuan (US$996) a metric ton. China is the biggest user of palm oil.

Still, any decline in prices may be limited amid speculation that drier-than-usual weather, triggered by an El Nino, may disrupt seasonally higher palm oil production in the second half, according to analysts. “We’re going to move” to an El Nino, Sean Darby, chief Asia and emerging markets strategist for Nomura International Hong Kong Ltd, said on June 5.

The US National Oceanic and Atmospheric Administration’s Climate Prediction Center warned on June 4 of “El Nino conditions during June to August.” The risk of El Nino weather developing this year has increased, Australia’s Bureau of Meteorology said on June 3.

Nirgunan Tiruchelvam, an analyst at Royal Bank of Scotland Asia Securities (Singapore) Pte Ltd who boosted his palm oil price forecast last month, yesterday raised his recommendation on Wilmar International Ltd, the biggest supplier of cooking oil in China, to “buy” from “sell.”

Tiruchelvam also increased the 12-month stock price target for Wilmar to S$5.36 from S$2.20 in a report. The stock traded today at S$4.90.

Palm oil futures in Malaysia may average US$700 a ton this year, US$50 higher than earlier forecast, Tiruchelvam had said on May 27. “We expect crude palm oil and soybean prices to rise sharply in 2009 as a shortage looks imminent,” he said yesterday in the report.

RUBBER

PRICES on the Malaysian rubber market closed mixed yesterday in quiet trading on lack of fresh leads, dealers said.

They said the local rubber market was steady despite the lack of interest following weaker rubber futures prices on the Tokyo Commodity Exchange as the crude oil price dropped below US$67 per barrel in Asian markets.

"The rubber prices, however, were still under pressure as the market was relatively quiet without much demand," one of the dealers said.

At noon, the Malaysian Rubber Board official physical price for tyre-grade SMR 20 rose 4.0 sen to 572.5 sen per kg while latex in bulk fell 0.5 sen to 402 sen per kg.

The unofficial sellers' closing price for tyre-grade SMR 20 increased by 0.5 sen to 571.5 sen per kg while latex in bulk decreased by 0.5 sen to 403 sen per kg.

TIN

THE tin price on the Kuala Lumpur Tin Market (KLTM) closed lower yesterday by US$60 to US$14,890 per tonne on lower demand, dealers said.

The fall in demand was despite the slightly higher tin price on the London Metal Exchange (LME) which stood at US$14,775 per tonne, up by US$70.

On the KLTM, bids amounted to 75 tonnes compared with offers at 150 tonnes. The day's turnover stood at 75 tonnes, down from the 100 tonnes recorded last Friday.

The price differential between the KLTM and LME decreased to a premium of US$365 per tonne compared with US$475 previously. - Agencies