Saturday, June 28, 2008
KUALA LUMPUR: Malaysian crude palm oil futures finished up 2.5 per cent on Friday, helped by a fresh peak in crude oil prices and short-covering. Oil leapt to a new record high near $142 a barrel on Friday, as tumbling global stock markets triggered a wider commodities rally.

“There’s widespread short-covering across the market,” a trader said. “The firmness in crude oil also helped support the momentum.” At the close, the benchmark September contract on the Bursa Malaysia Derivatives Exchange was up 88 ringgit to 3,623 ringgit ($1,111) a tonne, the day’s high. But some traders said high stock levels were weighing on the market.

“The market is caught in an unenviable position,” said a trader with a local commodities broker. “External factors like soy oil and crude oil support but the lack of further demand is leading to looming stockpiles and weakening seller’s bargaining powers.” Other traded months rose between 25 and 111 ringgit. Overall traded volumes stood at 12,168 lots of 25 tonnes each.

Traders say stockpiles of palm oil are likely to rise to record levels of around 2 million tonnes as demand from traditional consumers has slowed. Other traders remain more optimistic, saying China, India and Pakistan would start buying in a big way just two months before the festival starts in early September.

In Malaysia’s cash market, crude palm oil for June and July shipments in the southern region were quoted at 3,610/3,630 ringgit a tonne.

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