KUALA LUMPUR (Dow Jones)--Crude palm oil futures on Malaysia's derivatives
exchange ended lower Monday, closely tracking outside markets after RBD palm
olein was offered at a premium to crude soyoil for the first time in two years,
trade participants said.

  CPO futures ended lower despite strong gains in exports on concern that
demand may weaken in the medium term, they said.

  The benchmark June contract on Bursa Malaysia Derivatives ended MYR28 lower
at MYR1,902 a metric ton after reaching an intraday high of 1,948/ton.

  Now that palm olein has been recently offered at a $10/ton premium to soyoil,
the pair may swing between premiums and discounts to one another for a few
days, traders said.

  On Friday, palm olein was offered around $630 a metric ton for April shipment
while soyoil traded around $620/ton, free-on-board at Brazilian ports, said a
trader in Singapore.

  The shift to a premium for palm olein is in line with analysts' expectations,
but the condition is likely to be temporary, they said, as demand could now
shift towards soyoil, which is also in tight supply.

  According to an estimate by Hamburg-based journal Oil World, South America's
soybean production this year will likely be around 106 million tons, down from
115 million tons last year and well below earlier expectations of around 118
million tons.

  Several traders have said that any price-based shift in demand to soyoil will
be limited because if freight costs are taken into account, palm oil will
continue to be the cheaper option in most Asian markets, despite the premium
over soyoil on a free-on-board basis.

  "In times of recession, when buyers are more price-sensitive, they will buy
the cheapest oil, which is palm oil. The narrowing difference in prices doesn't
take into account the freight and refining costs of soyoil," said an executive
at a global trading company.

  Palm oil also has a captive market in India, where a waiver of an import duty
on CPO is likely to push inflows to an all-time high of more than 5.5 million
tons during the marketing year that ends Oct. 31, he said.

  Earlier in the day, CPO futures tested MYR1,950/ton as cargo surveyors
estimated a rise in Malaysia's palm oil exports during March 1-15. Intertek
Agri Services estimated exports up 16% on month at 591,567 tons. Another
surveyor, SGS (Malaysia) Bhd. put the numbers at 592,071 tons, up 20%.

  The euphoria dwindled as traders said a large part of the gains are due to
shipments to China, most of which had already taken place in the first week of
March - suggesting exports will be slower for the remainder of the month.

  Open interest in CPO on the BMD rose to 89,686 lots from 88,141 lots Friday.
The traded volume fell to 15,293 lots from 18,524 lots. One lot comprises 25
tons.

  Cash CPO for prompt shipment was last offered unchanged at MYR2,050/ton.

  Malaysia's cash palm olein for April was offered unchanged at $625/ton.

Closing BMD CPO futures prices in MYR/ton at 1000 GMT:

Month      Close    Previous   Change   High    Low
Apr 09     2,008    2,022      Dn  14   2,040   2,007
May 09     1,945    1,972      Dn  27   1,990   1,945
Jun 09     1,902    1,930      Dn  28   1,948   1,902
Jul 09     1,863    1,913      Dn  50   1,915   1,863