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KUALA LUMPUR: Crude palm oil prices (CPO) and other key commodities rose yesterday on improved investment appetite as China’s rising imports reflect signs of recovery in the Chinese economy.

Among the other commodities that rose in line with improved demand from China were crude oil and copper. Crude oil surged past US$60 (RM211.20) a barrel for the first time in six months on May 11. It was trading at US$59.8 a barrel on the New York Mercantile Exchange as at 4.24pm yesterday.

Copper for three-month delivery on the London Metal Exchange rose 1.3% to US$4,653 a tonne and was trading at US$4,595 a tonne at 4.24pm.

Statistics from the Chinese government showed that its exports and imports showed month-on-month (m-o-m) increase of 6.9% and 15.1%, respectively. The total value of imports and exports amounted to US$170.73 billion in April reflecting a m-o-m jump of 10.4% from March. Year-on-year, the value had declined 22.8%.

Apex Investment Services Bhd chief executive officer Tan Keah Huat told The Edge Financial Daily that the Chinese figures were a good indicator that demand for key commodities was on the rise.  

“China is a major consumer of commodities such as CPO and soy, among others. So, current commodities would sustain for a while, as we see there is a genuine need for these commodities, especially the consumable oils,” Tan said via telephone yesterday.

CPO prices extended its gain on improved demand from China as well as lower stockpile projection by the US for soybean oil, its rival vegetable oil. CPO prices were also buoyed by lower palm inventory of 1.26 million in April, down from 1.36 million recorded in March.

CPO for July delivery rose to RM2,794 a tonne, its highest in nine months, before closing at RM2,789 a tonne on Bursa Malaysia Derivatives. HwangDBS Research said it expected CPO prices to remain firm “into the next month”.

Plantation stocks on the Kuala Lumpur Composite Index rallied as well. Gainers were led by Kuala Lumpur Kepong Bhd and United Plantations Bhd, which rose 20 sen to RM11.30 and RM10.70, respectively. Kulim (M) Bhd gained 15 sen to RM6.05, IJM Plantations Bhd put 11 sen to RM2.52 while IOI Corporation Bhd two sen to RM4.46.

Sime Darby Bhd and Boustead Holdings Bhd each declined five sen and two sen to RM6.50 and RM3.60, respectively.

“Soybean prices, which had remained elevated in the first quarter, should remain firm,” HwangDBS said in a note to clients.

The US Department of Agriculture estimated soybean inventories at 130 million bushels on Aug 31, 2009, down 21% from 165 million projected last month. Soy prices for July delivery were trading at US$11.3 a bushel on Chicago Board of Trade (CBOT).

The rise in major commodities was also helped by the weakness of the dollar.

Gold prices advanced slightly yesterday. Gold for June delivery added US$3.54 from Tuesday’s close of US$923.35 to trade at US$926.9 an ounce on the New York Mercantile Exchange at 4.30pm yesterday.


This article appeared in The Edge Financial Daily, May 14, 2009.

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