Palm futures to fall on dampened demand

by **hlk** Sat 28 Jul 2012, 14:23

Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives are
likely to be lower next week on concerns that the lingering European
debt crisis will dampen demand growth from major economies, dealers
said.

Interband Group of Companies senior palm oil trader Jim
Teh said prices would likely move between RM2,800 and RM2,900 per tonne
next week.

"Even at this price, it is still a premium from the
cost of production which now stands at about RM1,200 to RM1,500 per
tonne," he said.

He said the market tone now is cautious as
industry players would rather take a wait-and-see attitude, adding
developments in the European debt crisis are still bearish as it may
take some time to resolve.

During the week, CPO futures prices
were on a declining trend due to concerns over the eurozone debt crisis
and weak export data from cargo surveyors.

Malaysia's palm oil
exports fell 14.3 per cent and 18.6 per cent for the July 1 to 25
period compared to the same period a month ago, according to cargo
surveyors Intertek Testing Services and Societe Generale de
Surveillance respectively.

Forecasts of better weather for
US' drought-hit plantation areas, which will boost outlook on the
soybean oil supply, also weighed on rival CPO futures prices.

On
Thursday, European Central Bank President Mario Draghi commented that
the bank would do what is necessary to prevent a collapse of the
eurozone.

This lifted sentiment on the commodities market,
but market players are expecting this to be shortlived as the lingering
financial problems in the eurozone still remain unresolved.

On a Friday-to-Friday basis, August 2012 declined RM109 to to RM2,901 per tonne on Friday from RM3,010 per tonne last Friday.

September 2012 declined RM110 to RM2,915 per tonne on Friday from RM3,025 per tonne last Friday.

October 2012 decreased RM115 to RM2,927 per tonne from RM3,042 per tonne last Friday.

November 2012 declined RM115 per tonne to RM2,935 per tonne from RM3,050 per tonne last Friday.

Turnover
increased to 171,868 lots from 150,321 lots last week while open
interest was higher at 116,012 contracts from 107,844 contracts last
week.

On the physcal market, August South decreased RM90 to RM2,920 per tonne from RM3,010 per tonne last Friday. -- BERNAMA