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Malaysia's palm oil futures lower on profit-taking after record gains

Monday, January 14, 2008

KUALA LUMPUR (Thomson Financial) - Crude palm oil (CPO) futures traded on the Malaysian derivatives exchange were broadly lower on Tuesday as traders took profits after yesterday's sharp rise.

At 10.49 am, the benchmark CPO contract for March delivery was down 21 ringgit at 3,393 ringgit per metric ton.

The contract hit an all-time high of 3,420 ringgit on Monday after Malaysia, one of the two top largest palm oil producers in the world, said palm oil inventory fell 7 percent in December on stronger overseas demand and lower production.

"We expect inventories to be drawn down once production starts to ease from the seasonally high period in the second half (of 2007)," said Penny Yaw, plantation sector analyst at Citigroup.

Overnight, soybean oil futures traded on the Chicago Board of Trade finished up 0.53 cent at 53.19 cents per pound.

Crude oil prices were higher in early Asian trading amid tensions in key crude producers Iran and Nigeria, which offset concerns that US oil demand could decline.

In morning trade, New York's main oil futures contract, light sweet crude for delivery in February, gained 3 cents to 94.23 dollars per barrel.

The price of CPO has shown stronger correlation with that of crude oil since 2007 as the edible oil can be blended with fossil fuel to create bio-diesel.

(1 US dollar = 3.25 ringgit)

Posted by MOHAMED SAID at 9:30 PM  


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