Palm oil closes up

Malaysian crude palm oil futures ended 1.9 per cent higher on Wednesday as traders closed their positions ahead of the Christmas holiday.

Crude palm oil has been one of the most bearish commodities this year, analysts say, with surging stock levels and a weaker crude mineral oil market dragging the vegetable oil down 65 per cent from a March peak of 4,486 ringgit per ton.

Palm oil seems sensitive to the swings in crude but it (the firmer close) is generally attributable to position squaring ahead of the holidays said the head of a local commodities broker.

Another trader said: Good exports for December have been priced in, so what the market needs to find out is how January exports will be like.

My guess is that it won’t be as spectacular as December or November. The benchmark March 2009 on Bursa Malaysia’s

Derivatives Exchange closed 29 ringgit higher at 1,559 ringgit ($448.9) per ton.

Gains in other traded months ranged between 22 ringgit and 30 ringgit.

Vegetable oil markets move in tandem with crude oil as soyoil and rapeseed oil are heavily subsidised as feedstock for biodiesel, which competes directly with petroleum diesel.

In Malaysia’s physical market, crude palm oil for both December and January shipments in both the southern and central regions saw bids and offers at 1,560/1,570 ringgit.

Trades were done at 1,560-1,570 ringgit.

The Indonesian palm oil market slowed as many players have gone for holidays.

The Jakarta-based state marketing centre will not hold any more palm auctions for this year. The next will be on Jan. 5, 2009.

Indonesia’s largest listed plantation firm, PT Astra Agro Lestari , also said it will not hold palm oil auctions from Dec. 25 to Jan. 2.

Producers in Medan -- home to Belawan port, Indonesia’s key port for palm oil exports -- did not hold an auction.

Meanwhile, refiners in Jakarta sold refined, bleached, deodorised (RBD) palm oil, used as cooking oil, at about 5,700 rupiah ($0.523) a kg, down from 5,850 rupiah per kg on Tuesday.—Reuters