NEWS SOURCE:

Crude palm oil futures on Malaysia’s derivatives exchange ended up Friday as investors covered short positions amid persistent concerns about palm oil supply.

A recovery in Chicago soyoil futures during Asian hours also supported the market, traders said.

The benchmark April contract on the Bursa Malaysia Derivatives ended MYR16 higher at MYR3,748/ton, after rising to MYR3,797/ton, the highest level since Jan. 10.

March soyoil futures on the Chicago Board of Trade were trading 10 points higher at 57.36 cents a pound in electronic trading at 1020 GMT.

But palm oil prices came off their highs, as tepid export data disappointed, trade participants said.

Cargo surveyor Intertek Agri Services said Thursday that it estimated exports during the first 20 days of January rose 9.7% from a month earlier to 852,607 tons. Another surveyor, SGS (Malaysia) Bhd., put the figure at 799,846 tons. Both figures were much lower than market expectations of exports around 860,000-886,000 tons.

Still, persistent concerns about palm oil output in Indonesia and Malaysia, the world’s two largest producers of the commodity, suggest that the rally in palm oil may continue next week, said a Kuala Lumpur-based trading executive.

“The market is estimating a 15% decline in January palm oil production, and output may fall more in February because of the upcoming Lunar New Year holidays…We may see a tight situation in stock levels,” said a trading manager at a Singapore-based agri-business trading company.

Output in December fell 1.23 million tons, a 16% decline from the previous month, according to data by the Malaysian Palm Oil Board.

Production in Malaysia and Indonesia usually go through a seasonal decline in the November-March period, but a shortage of labor and heavier rainfall in palm oil producing regions may mean weaker output in both countries.

The most actively traded rupiah-denominated palm oil contract for April delivery on the Indonesian Commodity & Derivatives Exchange was trading at IDR11,045/ton, up 1.3% from Thursday’s close.

CME Group’s dollar-denominated palm oil contract for April was trading at $1,232.25/ton, $23 higher than Thursday’s close, at 0900 GMT.

In the cash market, many trades were reported, with palm olein for March traded at $1,250/ton, April, May, June at $1,237.50/ton, $1,240/ton and July, August and September at $1,220/ton free on board Malaysian ports, said another Singapore-based trading executive.

Cash CPO for prompt shipment was offered MYR10 higher at MYR3,810/ton.

Open interest on the BMD was 87,055 lots, versus 87,693 lots Wednesday. One lot is equivalent to 25 tons.

A total of 19,698 lots of CPO were traded versus 26,371 lots Wednesday.