Weekly Crude palm Oil Report November 25 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week lower due to slower exports growth and the likelihood of continuous record palm oil stocks in November.


The benchmark FCPO February contract declined RM34 or 1.4 per cent to close at RM2,395 per tonne on Friday from RM2,429 per tonne last Friday.


The trading range for the week was from RM2,380 to RM2,485.


Total volume traded for the week amounted to 178,543 contracts, up 64,096 contracts from the previous week.


The open interest as at Thursday increased to 143,012 contracts from 136,895 contracts the previous Friday.


Cargo surveyor ITS released the palm oil export figures for the period of November 1 to 20 on Tuesday at 1,023,517 tonnes, a decline of 3.34 per cent while another surveyor SGS at 1,010,417 tonnes, a drop of 3.82 per cent from the same period last month.


The exports to China were continuously robust with an increase of 68 per cent growth in demand as of the first 20 days of November compared with the same period last month.


However, the overall exports growth was pulled back by the slowdown in demand from the European Union countries and India.


The palm oil production in November would be expected to remain at the current high level.


Hence, the palm oil stocks would be very likely to continuously increase this month.


There will be an industry conference in Bali, Indonesia next Wednesday till Friday.


As usual, the global top edible oils analysts like Dorab Mistry, Thomas Mielke and James Fry were invited as the speakers of the conference.


We expect there should not be many changes in their view in the coming conference in Bali as they had just presented their papers in an industry conference in Guangzhou, China early this month unless they have changed their view with new factors happening in the market.


The other main factor should be monitored closely from December onwards is the seasonal monsoon rains.

In our view, there may be possibility that the monsoon rains this year will be worse than the previous years.

If this factor is realised, the palm oil production may be affected and starts reducing from next month onwards.


On the economic front, the resurface on worries over debt issue in Greece and the US fiscal cliff would linger around the market sentiment for a while.


On the positive side, the manufacturing data in China showed an expansion on Thursday, above the benchmark of 50-level for the first time in November after contracting continuously for 13 months.


Technical View

The benchmark February contract retraced this week after the strong surge in the previous week.

The market temporary hit the resistance near the RM2,490 level and it may continuously consolidate at the current level next week.


After the current consolidation phase ends with the low of RM2,220 is not broken, we expect the market to start rally to reach RM2,820 level within the next three months.


Resistance would be pegged at RM2,490 and RM2,634 while support was set at RM2,320 and RM2,220.


Major fundamental news this coming week

Malaysian export data for November 1 to 25 by ITS and SGS on November 26 and the export figure for the full month of November by ITS and SGS on November 30.




-Courtesy of OPF-

Weekly Crude Palm Oil Report November 18 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives soared this week due to the lower than expected palm oil stocks build-up in October.

The benchmark FCPO February contract surged RM113 or 4.88 per cent to close at RM2,429 per tonne on Friday from RM2,316 per tonne last Thursday.

The trading range for the week was from RM2,220 to RM2,439.

Total volume traded for the week amounted to 114,447 contracts, down 84,482 contracts from the previous week.

The open interest as at Wednesday increased to 139,876 contracts from 138,208 contracts the previous Thursday.

MPOB released its bullish monthly reports on Malaysian palm oil’s supply and demand for October 2012 on Monday with palm oil stocks were slightly higher at 2.509 million tonnes, an increase of 1.11 per cent from the previous month and was far below the average estimation of the Reuter’s poll at 2.67 million tonnes.
The exports in October jumped 16.16 per cent to 1.758 million tonnes while the palm oil production reduced 3.28 per cent to 1.938 million tonnes.

The high palm oil exports were mainly contributed by the European Union countries with an increase of 70 per cent in their palm oil imports in October compared with the previous month.

The higher exports demand and lower production growth managed to slowdown the build-up in palm oil stocks in October.

If this trend continues in the coming month, the palm oil stocks will start turning down from the record high levels.

Cargo surveyor ITS released its latest palm oil export figures for the period of November 1 to November 15 on Friday at 769,087 tonnes, a slip of 0.06 per cent from the same period last month.

The exports growth in the last five days of November was sluggish probably due to two public holidays this week.

The Malaysian market was closed on Tuesday and Thursday, celebrating Deepavali and Awal Muharram respectively.

However, both cargo surveyors, ITS and SGS released good export data for the first ten days of November.
ITS indicated the export figures for the period of November 1 to November 10 on Monday at 518,688 tonnes, a surge of 15.62 per cent while another surveyor SGS at 514,798 tonnes, a jump of 22.35 per cent from the same period last month.

The rise in palm oil exports this month was mainly contributed by China as the Chinese importers were scrambling to stock up the refined palm products before the Chinese government implements stricter specifications on refined palm oil’s quality effective from January 1, 2013 onwards.

The increase in exports to China would be expected to extend until the end of this year with the estimation of more than 700,000 tonnes of palm oil would be exported to the country each month in November and December.

Technical View
The benchmark February contract surged this week after the market briefly broke the low of RM2,230 to reach the new low of RM2,220.

Thereafter, the market rebounded more than RM200 from the new low due to short covering activities.
In our view, the market is currently forming a bottom for the next rally.

Resistance would be pegged at RM2,490 and RM2,634 while support was set at RM2,220 and RM2,130.

Major fundamental news this coming week
Malaysian export data for November 1 to November 5 by SGS on November 19 and the export figure for November 1 to November 20 by ITS and SGS on November 20.

- Courtesy of OPF-

Weekly Crude Palm OIl Report November 4 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week sharply lower on concern over record high palm oil stocks for October in Malaysia.

The benchmark FCPO January contract plunged RM107 or 4.11 per cent to close at RM2,496 per tonne on Friday from RM2,603 per tonne last Thursday.

The trading range for the week was from RM2,490 to RM2,553.

Total volume traded for the week amounted to 159,935 contracts, up 32,109 contracts from the previous week.

The open interest as at Thursday increased to 133,402 contracts from 130,058 contracts the previous Thursday.

The palm oil stocks in Malaysia were expected to hit record high in October, ranging from 2.6 million to 2.65 million tonnes.

Although the palm oil exports showed an improvement, however it was unable to offset the strong production in October.

The palm oil production in October was estimated to fall about five per cent to around 1.9 million tonnes while the exports from both cargo surveyors, ITS and SGS, indicating to be in the range of 1.57 million to 1.6 million tonnes.

Cargo surveyor ITS released the palm oil export figures for the full month of October on Wednesday at 1,600,545 tonnes, a rise of 10.85 per cent while another surveyor SGS at 1,567,112 tonnes, an increase of 9.3 per cent from the same period last month.

The majority of the palm oil exports went to European Union countries and India.
On the other hand, the Indonesian government announced on Monday that they will cut its export tax for crude palm oil from 13.5 per cent in October to nine per cent for November.

The reduce in Indonesian palm oil export tax had further increased the toughness for the Malaysian suppliers to be competitive in the international palm oil trading compared with their Indonesian rivals.

In addition, the US soybean prices were also under selling pressure as some analysts estimated the US soybean crop and yield turning out to be better in the coming US Department of Agriculture’s report.
There will be an industry conference in Guangzhou, China on November 7 to 8 where the experts and analysts in the industry would give their view on the market outlook for oils and grains in 2012/13.

On the economic front, the official manufacturing data in China turned out to be better at 50.2 in October, showing an expansion in their manufacturing activities.

This was a good sign for the economic recovery in China.

However, the latest economic and jobs data in Europe remained weak.

There will be a Group of 20 (G20) meeting for the world finance ministers and central bank governors in Mexico this weekend to address the financial issues like the European debt crisis, the US fiscal cliff and the Japan’s debt problems.

Traders would also be focussing on the US presidential election and the meeting of top leaders in China next week.

Technical View
The benchmark January contract finally retraced this week and would be expected to continue the final wave down to form the bottom of the whole downtrend.

We expect the bottom would be set anytime in November and thereafter will form a strong base for the coming uptrend.

Resistance would be pegged at RM2,634 and RM2,755 while support was set at RM2,361 and RM2,230.

Major fundamental news this coming week
Reuters poll on the Malaysian supply and demand in October.

- Courtesy of OPF-

Weekly Crude Palm Oil Report October 28 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week higher on better export demand and short covering activities ahead of long holidays in Malaysia.

The benchmark FCPO January contract surged RM102 or 4.08 per cent to close at RM2,603 per tonne on Thursday from RM2,501 per tonne last Friday.

The trading range for the week was from RM2,497 to RM2,615.

Total volume traded for the week amounted to 127,826 contracts, down 71,522 contracts from the previous week.

The open interest as at Wednesday increased to 126,334 contracts from 125,799 contracts the previous Thursday.

Cargo surveyor ITS released the palm oil export figures for the period of October 1 to 25 on Thursday at 1,300,495 tonnes, a rise of 11.09 per cent while another surveyor SGS at 1,280,652 tonnes, an increase of 9.45 per cent from the same period last month.

On the supply side, some traders estimated the palm oil production in October would be slightly down to about five per cent.

The production during the fourth quarter 2012 should be toppish especially approaching the monsoon season end of the year.

An industry group in Indonesia indicated that the Indonesian government may cut its export tax for crude palm oil from 13.5 per cent to 10.5 per cent for November in its monthly adjustment for the export duty.
This may counter the effect by the Malaysian government to reduce its export tax for crude palm oil in its recent announcement.

The weekly crop progress report released by US Department of Agriculture on Monday indicated the soybean crop harvest was reported 80 per cent complete, advancing from 71 per cent from the previous week.

On the economic front, the manufacturing industry in China showed improvement with the data released on Wednesday was better than the market expectation.
This boosted the hope that the world second largest economy is recovering, and soon to demand for more commodities.

In addition, the US economic growth was also pointing to recovery with the latest third quarter gross domestic product data released was at two per cent, higher than the average analysts’ estimation of 1.8 per cent.

The coming November would be an interesting month as the world’s largest two economies, the US would be having presidential election, while China is in the transition of changing the country’s leader.
This may give lots of uncertainties and volatilities to the market movement towards the end of the year especially the measurements on the US financial fiscal cliff by the new president and the new policies by the new leaders to boost their country’s economy.

Technical View
The benchmark January contract continued to surge this week after the market broke the RM2,530 resistance.

Market is currently remained in the uptrend channel with strong resistance to be met in between RM2,634 and EMA50 line.

Focus would be put at this range as to see whether the market manages to break further up? We believe the market is going to correct soon before forming a strong base for the next uptrend.

Resistance would be pegged at RM2,634 and RM2,755 while support was set at RM2,361 and RM2,230.

Weekly Crude Palm Oil Report October 21 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended fl at this week, digesting the impact of newly announced export tax structure by the Malaysian government and analysing the mixed views by the top industry analysts during an industry conference on Tuesday.

The benchmark FCPO December contract rose RM1 or 0.04 per cent to close at RM2,501 per tonne on Friday from RM2,500 per tonne last Friday.

The trading range for the week was from RM2,417 to RM2,524.

Total volume traded for the week amounted to 199,348 contracts, down 4,237 contracts from the previous week.

The open interest as at Thursday decreased to 125,799 contracts from 141,841 contracts the previous Thursday.

After the announcement on the new crude palm oil export tax structure by the Malaysian government last Friday, palm oil producers requested the government to reconsider issuing tax-free crude palm oil quota especially to those companies which have refineries overseas.

These companies were depending on the tax-free crude palm oil export quota to maintain the profits of their refineries overseas.

With the abolishment of the tax-free crude palm oil export quota, it would definitely erode some of their gains and competitiveness in other regions.

Dorab Mistry, one of the leading edible oils’ analysts, said in an industry conference on Tuesday that palm oil prices could fall to RM2,200 per tonne within the next four to six weeks due to high palm oil stocks in Malaysia which may exceed three million tonnes by end of this year.

Another renowned analyst, Thomas Mielke, maintained his view that the wide discount between palm oil and other vegetable oils’ prices was unsustainable due to shortage in other vegetable oils supplies which would increase the demand for palm oil to fill the supply gap.

He forecasted palm oil prices to recover to RM3,300 per tonne somewhere in March to May next year.
Another analyst, Dr James Fry, said the premium of palm oil prices over crude oil prices in Europe collapsed from approximately US$300 per tonne at the beginning of this year to nearly par recently could boost the appeal to use palm oil as the feedstock to produce biodiesel.

According to Fry, the narrow price difference between palm oil and crude oil currently would become more feasible to produce biodiesel and direct burning of vegetable oils without any subsidy by the local government.

Cargo surveyor ITS released the palm oil export figures for the period of October 1 to 15 on Monday at 769,534 tonnes, a jump of 13.15 per cent while another surveyor SGS at 768,550 tonnes, a surge of 16.28 per cent from the same period last month.

The Malaysian market will be closed on Friday celebrating Hari Raya Haji.
  
Technical view
The benchmark January contract ended fl at this week and met a strong resistance at RM2,530 level despite strong export growth for the first half of October.

In our opinion, the current rebound may end around this level and the failure to break above RM2,530 level next week will bring palm oil price down again for the last wave to form the bottom of the downtrend.
Resistance would be pegged at RM2,530 and RM2,634 while support was set at RM2,361 and RM2,230.

Major fundamental news this coming week
Malaysian export data for October 1 to October 20 by SGS on October 22 and the export data for October 1 to October 25 by ITS and SGS on October 25.

-Courtesy of OPF-

Weekly Crude Palm Oil Report October 14 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week higher in the anticipation of palm oil export tax cut in Malaysia which also spurred technical buying in a deeply oversold condition.

The benchmark FCPO December contract rose RM85 or 3.52 per cent to close at RM2,500 per tonne on Friday from RM2,415 per tonne last Friday.

The trading range for the week was from RM2,361 to RM2,529.

Total volume traded for the week amounted to 203,585 contracts, down 14,659 contracts from the previous week.

The open interest as at Thursday increased to 141,841 contracts from 134,362 contracts the previous Thursday.

The Malaysian government announced on Friday that they would reduce the crude palm oil export taxes and scrapped the current free tax crude palm oil export quota effective from January 1 next year.

The new export taxes would be set based on the price range of crude palm oil in that particular month and the taxes would vary on monthly basis.

The concept of the new export taxes in Malaysia was similar to the Indonesian counterparts as to position Malaysia in a more competitive level in the international palm oil trading compared with Indonesia.

Cargo surveyor ITS released the palm oil export fi gures for the period of October 1 to 10 on Wednesday at 448,624 tonnes, a slip of 1.03 per cent while another surveyor SGS at 420,758 tonnes, a drop of 8.72 per cent from the same period last month.

Malaysia Palm Oil Board (MPOB) released its bearish monthly reports on Malaysian palm oil’s supply and demand for September 2012 on Wednesday with palm oil stocks were sharply higher at 2.481 million tonnes, a jump of 17.43 per cent from the previous month and was slightly above the average estimation of the Reuters’ poll at 2.46 million tonnes.

The exports in September rose 4.49 per cent to 1.506 million tonnes while the palm oil production soared 20.43 per cent to 2.004 million tonnes.

The strong growth in production which was more than four-time faster than the increase in exports demand, pushed the palm oil stocks level to all time record high in September.
The high stocks level was pretty much factored in during the plunge of palm oil prices in the past few weeks.

USDA released its monthly report on soybean supply and demand on Thursday with soybean ending stocks for 2012/13 increase to 130 million bushels from 115 million bushels while the soybean production was forecasted at 2.86 billion bushels, up from 2.634 billion bushels in the previous report.

Even though both soybean production and stocks level were higher than the previous report, most analysts viewed it as supportive as the stock-to-use ratio remained low in 46 years.
The continuous robust soybean demand from China was also the major factor of the above view.

Technical View
The benchmark December contract rebounded this week after the fundamental reports released were very much in tandem with the market expectation.

The benchmark contract would change from December to January month next Tuesday.
We expected the market to have some more room to move upward before tumbling down again to form the bottom of the downtrend.

Resistance would be pegged at RM2,570 and RM2,634 while support was set at RM2,361 and RM2,230.

Major fundamental news this coming week
Malaysian export data for October 1-15 by ITS and SGS on October 15 and the export data for October 1-20 by ITS on October 20.

-Courtesy of OPF-

Weekly Crude Palm Oil Report October 7 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives continuously tumbled for the third week due to the anticipation of rising palm oil stocks in the coming months.

The benchmark FCPO December contract plunged RM131 or 5.15 per cent to close at RM2,415 per tonne on Friday from RM2,546 per tonne last Friday.

The trading range for the week was from RM2,230 to RM2,560.

Total volume traded for the week amounted to 218,044 contracts, up 25,179 contracts from the previous week.

The open interest as at Thursday decreased to 134,362 contracts from 136,193 contracts the previous Thursday.

Cargo surveyor ITS released the palm oil export figures for the full month of September on Monday at 1,443,836 tonnes, a drop of 0.67 per cent while another surveyor SGS at 1,433,795 tonnes, an increase of 0.47 per cent from the same period last month.

A Reuters poll revealed on Friday that Malaysian palm oil stocks in September were expected to hit a record high at 2.46 million tonnes, a jump of 16.4 per cent from the previous month.

If this figure is realised in the next government monthly reports, it would surpass the previous record of 2.27 million tonnes set in November 2008.

According to the poll, palm oil exports were estimated to increase 5.8 per cent to 1.51 million tonnes while the production would surge 20 per cent to two million tonnes.

With such scenario, the exports growth was too low to offset the sharp rise in production, resulting the palm oil stocks to hit all-time record high.

The weekly crop progress report released by US Department of Agriculture (USDA) on Monday indicated the soybean crop harvest was reported 41 per cent complete, advancing from 22 per cent the previous week.

The soybean harvest in US was progressing well without much weather disruption at this current moment.
Some analysts estimated the US soybean production and yield would turn out to be better in the coming government monthly reports which would be released next week.

Palm oil prices got a lift during mid-week on bargain hunting after the market was deeply oversold.
The tropical oil prices was also supported when Malaysian Plantation Industries and Commodities ministry said on Thursday that they would propose to the cabinet to reduce crude palm oil export taxes from 23 per cent to between eight per cent to 10 per cent.

This move was aimed to position Malaysia to be more competitive in the international palm oil trading compared with the Indonesian rivals and to reduce the current high palm oil stocks level.

However, the hope of cutting crude palm oil export taxes faded when the Malaysian cabinet delayed taking any decision on the proposal on Friday.

Technical View
The benchmark December contract plunged to a new low of RM2,230 this week, a level not seen since November 2009.

We expect the market to fluctuate wildly at the current level with the radius of RM150 range next week.
However, the whole downtrend seemed not completed yet and more observation is needed.

Resistance would be pegged at RM2,570 and RM2,755 while support was set at RM2,393 and RM2,230.

Major fundamental news this coming week
MPOB’s monthly supply demand report on October 10, Malaysian export data for October 1 to October 10 by ITS and SGS on October 10 and USDA’s monthly supply-demand report on October 11.

- courtesy of OPF-

Weekly Crude Palm Oil Report September 23 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives dived this week following the sharp plunge in US soybean prices, the anticipation of rising palm oil stocks and the continuation of weak economic data in China.

The benchmark FCPO December contract plunged RM174 or 5.93 per cent to close at RM2,762 per tonne on Friday from RM2,936 per tonne last Friday.

The trading range for the week was from RM2,755 to RM2,894.

Total volume traded for the week amounted to 184,766 contracts, down 14,365 contracts from the previous week.

The open interest as at Thursday increased to 131,290 contracts from 120,285 contracts the previous Thursday.

Crude palm oil prices opened the week sharply lower after the long weekend break, following the daily down-limit in soybean prices on Monday.

The soybean complex prices were under tremendous selling pressure this week due to the on-going US harvest and the anticipation of better US soybean yields.

The weekly crop progress report released by US Department of Agriculture (USDA) on Monday indicated the soybean crop harvest was reported 10 per cent complete, advancing from four per cent the previous week and was well above the average harvest of four per cent for the past five years.

This had driven the funds that were holding large amount of long positions in soybean complex to exit their positions and triggered some speculative selling as well.

The favourable weather in Brazil this month allowed the farmers to start an early soybean planting for their harvest in 2013 also added to the selling pressure.

The preliminary manufacturing data in China for September was showing further contraction for the consecutive of 11-month which may dampen the demand for the global commodities from the world second largest economy.

Cargo surveyor ITS released the palm oil export figures for the period of September 1 to 20 on Thursday at 928,110 tonnes, a jump of 14.61 per cent while another surveyor SGS at 900,450 tonnes, a surge of 12.78 per cent from the same period last month.

The strong export demand failed to turn around the weak market sentiment in palm oil as some traders expected the high production in September would be more than enough to offset the strong demand, leading to rising palm oil stocks which could cross more than 2.2 million tonnes.

Most traders would be waiting for the views from the top industry analysts such as Dorab Mistry, Thomas Mielke and Dr.James Fry on the price outlook for edible oils in year 2012/13 during an industry conference in Mumbai, India from September 22 to 23.

Technical View
The benchmark December contract broke all the major supports and was under significant selling pressure.
The latest chart development painted a bearish view on palm oil prices especially the price broke RM2,820 level and tested the low of RM2,755, a level not seen since October 2011.

If the palm oil prices further broke the RM2,754 level, it will attract more technical selling and long liquidation which may further push the market down for another few hundred ringgit.

The rise above RM2,820 level will pull the market back to sideway consolidation mode.
Resistance would be pegged at RM2,820 and RM2,989 while support was set at RM2,754 and RM2,520.

Major fundamental news this coming week
Malaysian export data for September 1-25 by ITS and SGS on September 25.

-Courtesy of OPF-

Weekly Crude Palm Oil Report September 16 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week slightly higher after the US Federal Reserve announced a third round of quantitative easing programmes and the Germany’s top court approved the ratification of the eurozone’s permanent rescue fund.

The benchmark FCPO November contract rose RM9 or 0.31 per cent to close at RM2,936 per tonne on Friday from RM2,927 per tonne last Friday.

The trading range for the week was from RM2,874 to RM2,948.

Total volume traded for the week amounted to 199,131 contracts, up 2,534 contracts from the previous week.

The open interest as at Thursday increased to 120,285 contracts from 114,039 contracts the previous Thursday.

The US Federal Reserve said on Thursday that it would be aggressively buying the securities with unlimited monthly purchases of US$40 billion of mortgage debt until there was improvement in the labour market.
Meanwhile, the German Constitutional Court also permitted Germany to ratify the permanent rescue fund, the European Stability Mechanism (ESM), and the European fiscal treaty on Wednesday in resolving the eurozone debt crisis.

Both good news lifted the global equities and commodities prices on Thursday and Friday.
Cargo surveyor ITS released the palm oil export figures for the period of September 1 to September 10 on Monday at 453,302 tonnes, a jump of 26.84 per cent while another surveyor SGS at 460,939 tonnes, a surge of 29.98 per cent from the same period last month.

The sharp rise in demand this time was mainly contributed by the crude palm oil export to India where the free-tax crude palm oil quota was lifted to additional two million tonnes early last month.

MPOB released its bearish monthly reports on Malaysian palm oil’s supply and demand for August 2012 on Monday with palm oil stocks were continuously higher at 2.115 million tonnes, an increase of 5.81 per cent from the previous month and was slightly above the average estimation of the Reuter’s poll at 2.09 million tonnes.

The exports in August rose 10.05 per cent to 1.427 million tonnes while the palm oil production slipped 1.73 per cent to 1.663 million tonnes.

USDA released its supportive monthly report on soybean supply and demand on Wednesday with soybean ending stocks for 2011/12 fell to 130 million bushels from 145 million bushels while the soybean production was forecasted at 2.634 billion bushels, down from 2.692 billion bushels in the previous report.
Dr James Fry, a leading edible oils analyst, said on Wednesday in a conference in Kuala Lumpur that crude palm oil prices might fall to RM2,450 per tonne in the first quarter of 2013 if brent crude prices drop to US$80 per barrel.

Technical view
The benchmark November contract was firmly supported above the red line and the market would be expected to have limited downside due to lots of good news announced during the week and the wide discount between palm oil and soybean oil prices.

We expect the market will rebound next week at least to cover the gap at RM2,969 to RM2,989 levels.
The benchmark contract will change to December month on Tuesday.

Resistance would be pegged at RM2,989 and RM3,100 while support was set at RM2,874 and RM2,820.

Major fundamental news this coming week
Malaysian export data for September 1 to September 15 by ITS on September 15 and by SGS on September 18 and the export figure for September 1 to September 20 by ITS and SGS on September 20.

-Courtesy of OPF-

Weekly Crude Palm Oil Report September 9 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week sharply lower due to the anticipation of higher palm oil stocks level in August and the current US weather condition had stabilised the crop from further deteriorating.

The benchmark FCPO November contract plunged RM92 or 3.05 per cent to close at RM2,927 per tonne on Friday from RM3,019 per tonne last Friday.

The trading range for the week was from RM2,895 to RM3,100.

Total volume traded for the week amounted to 196,597 contracts, up 60,870 contracts from the previous week.

The open interest as at Thursday decreased to 114,039 contracts from 126,836 contracts the previous Thursday.

Most traders liquidated some riskier positions in the palm oil market ahead of the major fundamental reports to be released next week.

A Reuters poll revealed on Wednesday indicating that Malaysian palm oil stocks were expected to increase 4.5 per cent to 2.09 million tonnes in August from the previous month as the high production outpaced the rise in exports.

According to the poll, the palm oil exports were estimated to surge 11.8 per cent to 1.45 million tonnes while the production would fall three per cent to 1.64 million tonnes.

One of the top industry analysts, Dorab Mistry provided his view on palm oil prices during the Global Commodities Conference – Asia 2012 in Singapore on Thursday saying that palm oil prices was hard to be bullish given the record palm oil stocks and high production cycle currently which would be expected to hit new peaks in September and October.

He pegged the palm oil prices to be trading between RM2,900 to RM3,300.

Cargo surveyor SGS released the palm oil export figures for the full month of August on Tuesday at 1,427,052 tonnes, a surge of 19.6 per cent from the same period last month.

Most of the rise in exports was mainly to India and China which showed an increase of 81 per cent and 43 per cent respectively compared with the previous month.

The European Central Bank (ECB) unveiled a new bond-buying program named as Outright Monetary Transactions (OMT) on Thursday to ease the eurozone debt crisis.

The announcement by the ECB immediately pressured the Spain and Italian bond yield and triggered the global equities to surge more than two per cent the same day.

The next focus would be on the Federal Open Market Committee meeting which was scheduled on September 12 to 13 on the possibility of any quantitative easing programs to be announced given the disappointing US jobs data released on Friday.

Technical View
The benchmark November contract was noted to face resistance at RM3,100 level and the inability to rise further from that level especially to cross above the EMA 200 line pressured the palm oil market to fall back forming a more complex consolidation phase which may drag for another couple of weeks before a clearer trend is noted.

The red line support will be closely monitored and more observation needed to see how the chart pattern developed from here.

Resistance would be pegged at RM3,193 and RM3,270 while support was set at RM2,895 and RM2,820.

Major fundamental news this coming week
MPOB’s monthly supply demand report on September 10, Malaysian export data for September 1-10 by ITS and SGS on September 10 and USDA’s monthly supply-demand report on September 12.

Courtesy of OPF

Weekly Crude Palm Oil Report 2 September 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week lower due to profit taking and positions squaring activities ahead of the long weekend after the market rose sharply for the past two weeks.

The benchmark FCPO November contract declined RM50 or 1.63 per cent to close at RM3,019 per tonne on Friday from RM3,069 per tonne last Friday.

The trading range for the week was from RM2,978 to RM3,122.

Total volume traded for the week amounted to 135,727 contracts, up 24,498 contracts from the previous week.

The open interest as at Wednesday increased to 129,327 contracts from 123,958 contracts the previous Thursday.

Typhoon Bolaven hit China on Tuesday on a weaker basis in terms of winds and rains which did not bring much harm to the crop production in China.

However, the Tropical Storm Isaac in US was strengthened to Hurricane Isaac Category 1 brought massive rainfalls, strong winds and floods to the US Gulf Coast region over the week, shutting down most of the oil and natural gas drilling platforms and refineries in the area and stalling the local business activities in the region.

The Hurricane Isaac was sighted to move forward and would bring moderate to heavy rainfalls to most of the southern half of US over the weekend.

Some analysts commented the rainfalls came too late to revive the soybean crops in the southern areas but it did bring some relief to the drought stricken region.

However, the heavy rainfalls may also halt the harvesting progress which is on-going currently in those areas.
The weekly crop progress report released by USDA on Monday indicated the soybean crop condition slipped slightly where the soybean crop was reported 30 per cent in good to excellent condition, down from 31 per cent the previous week.

Cargo surveyor ITS released the palm oil export fi gures for the full month of August on Friday at 1,453,544 tonnes, a surge of 17.73 per cent from the same period last month.

Earlier, cargo surveyor SGS released the palm oil export fi gures for the period of August 1 to 25 on Monday at 1,051,541 tonnes, an increase of 6.56 per cent from the same period last month.

The Federal Reserve chairman Ben Bernanke hinted on the possibility and the need of more quantitative easing programs during his speech in Jackson Hole on Friday given the current high unemployment and stagnation in the US labour market.

His remarks lifted the sentiment in the overnight US equities market.

Traders would also focus on the outcome of the European Central Bank’s monetary policy next Thursday to gauge the development of the eurozone debt crisis.

The US market will be closed on Monday celebrating the Labour Day.

Technical View
The benchmark November contract retraced this week after the sharp rally for the past two weeks as we had mentioned earlier.

The market covered the gap nicely and we expect the uptrend would start anytime soon.
Resistance would be pegged at RM3,193 and RM3,270 while support was set at RM2,973 and RM2,820.

Major fundamental news this coming week
Malaysian export data for the full month of August by SGS on September 3 and the Reuters’ poll on the August’s palm oil supply and demand.

Courtesy of OPF

Weekly Crude Palm Oil Report August 26 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives soared this week due to the outlook of lower crop production in US and the anticipation of better demand for crude palm oil in the coming weeks.
The benchmark FCPO November contract jumped RM107 or 3.61 per cent to close at RM3,069 per tonne on Friday from RM2,962 per tonne last Friday.

The trading range for the week was from RM3,010 to RM3,100.

Total volume traded for the week amounted to 111,229 contracts, down 42,668 contracts from the previous week.

The open interest as at Thursday increased to 123,958 contracts from 115,338 contracts the previous Thursday.

According to the crop tour conducted by Pro Farmer this week, the US corn and soybean production was estimated to be lower than the US Department of Agriculture (USDA) report due to the worst drought condition hitting the region in 56 years.

Pro Farmer pegged the US corn crop for 2012/13 at 10.478 billion bushels against 10.779 billion bushels in the latest USDA monthly report while soybean crop at 2.6 billion bushels versus 2.692 billion bushels in the government report.

Traders were also monitoring on the typhoon development in China coast where Typhoon Bolaven was expected to hit North East of China by the middle of next week.

Typhoon Bolaven might bring heavy rains and flooding to the country’s main producing areas of soybean and corn in which the impact might be potentially harm up to 20 per cent of the crops.

The weekly crop progress report released by USDA on Monday indicated the soybean crop condition further improved slightly where the soybean crop was reported 31 per cent in good to excellent condition, up from 30 per cent the previous week.

The latest weather forecast indicated heavy rains would fall in the Midwest over the weekend but the overall total precipitation remained below the average.

Cargo surveyor ITS released the palm oil export fi gures for the period of August 1 to August 20 on Wednesday at 809,814 tonnes, an increase of 5.96 per cent from the same period last month.

Traders need to monitor closely on the development of the eurozone debt crisis issue from now onwards as there would be lots of news flowing out in September.

One of the key issues would be the Germany’s Constitutional Court rules on the legality of the eurozone bailout fund which was scheduled on September 12.

Other than that, the Federal Open Market Committee (FOMC) meeting on September 12 to September 13 would also be the limelight on the possible announcement of the implementation of the quantitative easing programmes.

The Malaysian market will be closed on Friday celebrating the National Day.
Technical View The benchmark november contract rose sharply this week following the broad gains in the US grain markets.

The break above RM3,000 this week has confirmed the double bottom formation.

However, the market has risen too fast leaving two gaps behind in the chart where there would be a possibility of the market to cover at least one of the gaps.

Nevertheless, the latest chart development indicated the market was set for bull run soon.

Resistance was be pegged at RM3,193 and RM3,270 while support was set at RM2,973 and RM2,820.
Major fundamental news this coming week Malaysian export data for August 1 to August 20 and August 1 to August 25 by SGS on August 27.

-Courtesy of OPF-

SELAMAT HARI RAYA AIDILFITRI 2012

To all Muslims around the globe...

 

Weekly Crude Palm Oil Report August 12 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives declined this week due to the rising palm oil stocks in July and the improved weather condition in US.

The benchmark FCPO October contract fell RM36 or 1.23 per cent to close at RM2,882 per tonne on Friday from RM2,918 per tonne last Friday The trading range for the week was from RM2,839 to RM2,938.

Total volume traded for the week amounted to 123,147 contracts, down 1,236 contracts from the previous week The open interest as at Thursday increased to 117,109 contracts from 115,084 contracts the previous Thursday.

The palm oil market started at a weaker tone this week as most traders anticipated the palm oil stocks in July would have a substantial increase coupled with abundant of beneficial rains in US over the weekend brought some relief to the stressful soybean crops.

The weekly crop progress report released by US Department of Agriculture (USDA) on Monday indicated the soybean crop condition had stabilised and stopped from further deteriorating currently thanks to the timely and beneficial rains started a week ago.

The soybean crop was reported 29 per cent in good to excellent condition, unchanged from the previous week.

The weather forecast of wetter and cooler temperature was seemed moving into the drought area in Midwest in the coming weekend till next week which would be beneficial to the late-planted soybean crop.

Cargo surveyor ITS released the palm oil export figures for the period of August 1 to 10 on Friday at 357,372 tonnes, a slip of 1.81 per cent while another surveyor SGS at 354,614 tonnes, an increase of 6.82 per cent from the same period last month.

The demand from the top importing countries like China and European Union countries were seemed to start picking up again.

Traders would focus more on the demand trend from now onwards as to monitor whether the switch of demand from soybean oil to palm oil would increase given the huge disparity between the two edible oils’ prices.

MPOB released its bearish monthly reports on Malaysian palm oil’s supply and demand for July 2012 on Friday with palm oil stocks were sharply higher at 1.999 million tonnes, a jump of 17.64 per cent from the previous month and within the average estimation of the Reuter’s poll at two million tonnes.

The exports in July plunged 15.33 per cent to 1.297 million tonnes while the palm oil production surged 15.05 per cent to 1.692 million tonnes.

USDA released its bullish monthly report on soybean supply and demand on Friday with soybean ending stocks for 2012/13 fell to 115 million bushels from 130 million bushels while the soybean production was forecasted at 2.692 billion bushels, down from 3.050 billion bushels in the previous report.

Technical View 
The benchmark October contract tested the previous low of RM2,838 level after the bearish MPOB reports were released but bounced back strongly thereafter as the data was widely expected while some traders covered their shorts ahead of the USDA reports.

The market is consolidating and forming a base at the current level and would start moving up again once the coming exports data indicate the demand is improving Resistance would be pegged at RM3,007 and RM3,067 while support was set at RM2,838.

Major fundamental news this coming week
Malaysian export data for August 1-15 by ITS and SGS on August 15.


Courtesy of OPF

Weekly Crude Palm Oil Report August 5 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week slightly lower due to the weaker exports demand and the rising palm oil production in July.

The benchmark FCPO October contract slipped RM9 or 0.31 per cent to close at RM2,918 per tonne on Friday from RM2,927 per tonne last Friday.

The trading range for the week was from RM2,905 to RM3,007.

Total volume traded for the week amounted to 124,383 contracts, down 47,485 contracts from the previous week.

The open interest as at Thursday increased to 115,084 contracts from 106,686 contracts the previous Thursday.

The palm oil market was lifted earlier in the week with the anticipation of continuous hot and dry weather pattern in US but the sentiment changed during the mid-week when the weather forecast indicated some beneficial rains would bring relief to some parts of the hot and dry area in the Midwest over the weekend.
There will be forecast for continuous rains late next week and would bring the needed moisture to the soil especially for soybean crop.

Most analysts commented the rains came in too late for the corn but may revive some of the soybean crops as the soybean crops are in the key development period currently.

The weekly crop progress report released by US Department of Agriculture (USDA) on Monday indicated the crop condition further deteriorating with the soybean crop was 29 per cent in good to excellent condition, reducing from 31 per cent the previous week.

The palm oil market was also pressured later of the week when the US Federal Reserve dampened the hope of the implementation of the quantitative easing during the Federal Open Market Committee (FOMC) meeting on Wednesday as the US economic data was not weak enough for them to take further action.

The market was also disappointed with the European Central Bank (ECB) when they failed to take immediate action to tackle the eurozone debt crisis on Thursday versus the ECB chief’s comments that the central bank would do everything to defend the euro in the previous week.

Cargo surveyor ITS released the palm oil export figures for the full month of July on Tuesday at 1,234,603 tonnes, a drop of 14.81 per cent while another surveyor SGS at 1,193,227 tonnes, a fall of 18.49 per cent from the same period last month.

The Malaysian government announced on Wednesday to increase the duty-free crude palm oil exports quota to 5.6 million tonnes from 3.6 million tonnes in a temporary move to counter the weak exports demand and to manage the palm oil stockpiles during the high production cycle.

Technical View
The benchmark October contract was trading sideways this week and very likely would remain the same for next week as most traders would position themselves ahead of the key major reports to be released next Friday.

The downside of the market may be limited as most analysts anticipated tighter global soybean stocks in next Friday’s report while the market would be capped at higher level due to the potential rains forecast later of next week.

Resistance would be pegged at RM3,007 and RM3,067 while support was set at RM2,880 and RM2,838.

Major fundamental news this coming week
MPOB’s monthly supply demand report on August 10, Malaysian export data for August 1-10 by ITS and SGS on August 10 and USDA’s monthly supply-demand report on August 10.

Courtesy of OPF

Weekly Crude Palm Oil Report July 29 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives plunged this week due to the forecast of improved weather condition in US and the resurfacing of the eurozone debt crisis.

The benchmark FCPO October contract tumbled RM115 or 3.78 per cent to close at RM2,927 per tonne on Friday from RM3,042 per tonne last Friday. The trading range for the week was from RM2,880 to RM3,008.

Total volume traded for the week amounted to 171,868 contracts, up 21,547 contracts from the previous week.  The open interest as at Thursday increased to 106,686 contracts from 103,992 contracts the previous Thursday.

The palm oil market suffered a double whammy this week as the weather forecast indicated improved rains in the US drought stricken areas and the debt crisis condition in Spain worsened approaching for seeking bailout.

Rains moved across to most parts in the US Midwest this week, providing some beneficial soil moisture for the crops. However, the amount of rains needed was still light especially in the central and western of Midwest.

Rains are very important in the coming few weeks to revive the potential yield of soybean as the soybean crop is entering the crucial growing phase of pods setting and filling.

The rains event this week was only temporary bringing relief from the current heat and dryness stress to soybean crop and the crop condition would be very much dependant on the weather condition these coming few weeks.

The latest weather forecast report indicated the warm and dry weather would return in the US next week coupled with limited rains sighted sparked the traders to short cover and added back some risk premium to soybean prices before the week ended.

The weekly crop progress released by US Department of Agriculture (USDA) on Monday indicated the crop condition in the US further deteriorating. The soybean crop was 31 per cent in good to excellent condition, reducing from 34 per cent the previous week.

The palm oil export demand remained weak even though there was a slight improvement in the latest exports data released.
 
Cargo surveyor ITS released the palm oil export figures for the period of July 1 to July 25 on Wednesday at 1,026,153 tonnes, a drop of 14.25 per cent while another surveyor SGS at 986,829 tonnes, a fall of 18.6 per cent from the same period last month.

With the weak exports demand currently, some traders anticipated the palm oil stocks would be easily cross above 1.8 million tonnes from 1.7 million tonnes in the previous month as they forecasted the production in July would increase double digit percentage.

Technical View 
The benchmark October contract had broken our major support at RM2,970 to RM3,000 levels this week which had turned the market from bull to neutral.

Weather in the US would remain the main focus in the coming weeks’ price movement and the market could be volatile as what we had mentioned last week.

If hot and dry weather persisted, the market would be very likely to break above RM3,000 again but if timely rains could reach most of the needed dry areas in the US, the market may test the previous low of RM2,838.

Resistance was pegged at RM2,986 and RM3,067 while support was set at RM2,838 and RM2,754.

Major fundamental news this coming week
Malaysian export data for full month of July by ITS and SGS on July 31.

Courtesy of OPF

Bursa Suq Al-Sila

Bursa Suq Al-Sila' is a commodity trading platform specifically dedicated to facilitate Islamic liquidity management and financing by Islamic banks. Initiated as a national project, Bursa Suq Al-Sila' exhibits the collaboration of Bank Negara Malaysia (BNM), the Securities Commission Malaysia (SC), Bursa Malaysia Berhad (Bursa Malaysia) and the industry players in support of the Malaysia International Islamic Financial Centre (MIFC) initiative. It receives close co-operation and strong support of the Ministry of Plantation Industries and Commodities through the Malaysian Palm Oil Board (MPOB), Malaysian Palm Oil Association (MPOA) and Malaysian Palm Oil Council (MPOC).

The fully electronic web based platform provides industry players with an avenue to undertake multi commodity and multi currency trades from all around the world.

This pioneering effort cements Malaysia's strength in both Islamic finance and Crude Palm Oil industry. Bursa Suq Al-Sila' is another innovative offering and a world's first for Malaysia, further strengthening its position as an international Islamic financial hub. In effect, Bursa Suq Al-Sila' integrates the global Islamic financial and capital markets together with the commodity market.

All businesses and activities of Bursa Suq Al-Sila' are managed by Bursa Malaysia Islamic Services Sdn Bhd (BMIS), a wholly-owned subsidiary of Bursa Malaysia which is regulated, transparent and fully Shari'ah compliant.

Weekly Crude Palm Oil Report 22 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week slightly lower due to the continuous fall in exports demand and the anticipation of higher palm oil production in July.

The benchmark FCPO October contract fell RM23 or 0.75 per cent to close at RM3,042 per tonne on Friday from RM3,065 per tonne last Friday.

The trading range for the week was from RM2,986 to RM3,161.

Total volume traded for the week amounted to 150,321 contracts, down 3,416 contracts from the previous week.

The open interest as at Thursday decreased to 103,992 contracts from 94,948 contracts the previous Thursday.

Cargo surveyor ITS released the palm oil export fi gures for the period of July 1 to 20 on Friday at 764,273 tonnes, a plunge of 22.95 per cent while another surveyor SGS at 768,555 tonnes, a dive of 22.89 per cent from the same period last month.

Most of the fall in exports demand was due to the sharp drop in exports to China while the demand from the Muslim countries like Pakistan, India and Middle East were seem slowing down, approaching the fasting month which would start from this weekend onwards.

Some traders anticipated the palm oil production in July would start increasing until October as we had entered the high production cycle for palm oil during this time of the year.

With the poor performance from the exports demand recently, the palm oil stocks would be expected to increase from July onwards.

However, we expected the increase in palm oil production would not be high as the productivity of the workers in the fi eld would be low entering the fasting month and thereafter most of the workers would be away celebrating the Muslim festival a month later.

The continuous hot and dry weather in the US had started to cause damage to some of the corn and soybean crops in certain areas.

Based on some weather forecast reports, the hot and dry weather pattern would be expected to persist especially in the central and western Midwest until early of August while limited and scattered rains would appear in the northern and eastern Midwest.

The US Department of Agriculture (USDA) released its weekly crop progress report on Monday saying that 31 per cent of corn crop was in good to excellent condition as of Sunday, declining from 40 per cent the previous week while soybean crop was 34 per cent in good to excellent condition, reducing from 40 per cent the previous week.

The above factors had widened the palm oil discount against the soybean oil prices from the usual US$100 per tonne to above US$230 per tonne lately and some traders expected this spread to further widen to US$300 per tonne if the weather condition in the US kept worsening.

Technical View
We maintained our view that the palm oil market would be strongly supported at RM2,970 to RM3,000 levels and will have the tendency to rally once the consolidation phase has completed.

The market would be expected to be volatile in the coming weeks especially weather is the main factor driving the price movement.

Resistance would be pegged at RM3,193 and RM3,270 while support was set at RM2,970 to RM3,000.

Major fundamental news this coming week
Malaysian export data for July 1-25 by ITS and SGS on July 25.

Courtesy of OPF

CP8 RBD PALM OLEIN GENERAL TRADING PROCEDURE

IMPORTANT INFORMATION FOR BUYERS 

PLEASE READ THE FOLLOWING CAREFULLY - IT WILL ASSIST YOU IN? COMPLETING YOUR CONTRACT WITH THE SELLER WITH MINIMUM DELAY 

Many contracts between buyer and seller fail not because of price but because there is a fundamental misunderstanding of the sellers procedures. 

Procedures are put in place not because the seller wishes to put obstacles in the buyer's way but more to assist the buyer to progress his prospect efficiently and with minimal delays. Take the time to read the procedures and understand exactly what they say. 

Once you have read and understood the procedures - follow them to the letter and see how quickly both this and the seller's infrastructure respond to you and your requirement. 

LOI / ICPO

Either one of these are required to progress a prospect. This is not because the seller wishes to avail himself of confidential information, this is because the sellers contract calls for this information.

The LOI/ICPO save much time and frustration as they spell out the buyer's requirement and deliver information that will be required to complete the contract. 

Upon receipt of the LOI the seller will issue an FCO - the FCO will verify the terms and price by which the seller will provide the produce. Sign and seal the FCO and with a Proof of Funding, return the FCO back to the seller direct or to this infrastructure. 

The ICPO is very much in the same format as the LOI with the exception that it is an IRREVOCABLE CORPORATE PURCHASE ORDER - this should be supplied with your proof of funding attached. When the seller receives an acceptable ICPO and proof of funding, he will go straight to draft contract. 

At this stage there is no need for the issue of an FCO unless the buyer requests it.

PROOF OF FUNDING

This is a very important integral part of the documentation when first commencing a prospect. Due to much time wasting in the past, all sellers insist on PROOF OF FUNDING to give them a level of comfort that the prospective buyer is real and does have the funding to enter into a contract. 

Speak with your bankers first, establish and have ready a proof of funding.

Make sure you have the funds available before making the approach - too many buyers will place themselves in a situation whereas they will negotiate a price and contract, then find out they cannot raise the funding to support their commitment. 

This does little less then frustrates all parties from buyer through to seller to introducing intermediary. Funding should always be available for the total face value of the financial instrument you have agreed.

CONTRACT VERBIAGE

The seller will where appropriate supply a verbiage of the Contract. Study this carefully and respond to the seller with any questions that you feel you may need answering. Please ensure that any issues you have with the contract are addressed and resolved at this stage and not after it has been signed. 

PERFORMANCE BOND / POP

The seller may issue a PERFORMANCE BOND in some cases. A NON OPERATIVE PERFORMANCE BOND against the pre advised L/C with a POP. The PB will either be drawn on or confirmed by a Prime Western Bank.

The activation of the L/C automatically activates the PB. A POP will only be supplied under these conditions - there is no point in requesting it under any other circumstances. 

FINANCIAL INSTRUMENTS

The seller will only accept the following Financial Instruments. BANK GUARANTEE - IRREVOCABLE, TRANSFERABLE, DOCUMENTARY CREDIT 100% at SIGHT - TRANSFERABLE STANDBY L/C . DEFERRED PAYMENT L/C's are not acceptable as a rule. 

AN IRREVOCABLE, TRANSFERABLE, DOCUMENTARY CREDIT 100% at SIGHT permits the seller to liberate the L/C by the amount of the shipment value against production of shipping documents.

ALL FINANCIAL INSTRUMENTS ARE IN CONFORMITY TO UCP500

REFERENCES

Some Intermediaries have asked that we provide them with references - the answer to this is an emphatic NO. References will only be provided by the sellers bank to the buyers bank by way of a POP and this is conditional upon the buyer proving financial capability first and submitting the request for a reference in writing - there are no exceptions.

PROOF OF PRODUCT / SAMPLES

POP will be supplied as defined under the topic of PB above. Samples cannot be supplied for a variety of reasons. 

A seller who agrees to deliver a sample to a buyer is entering into a contract to supply the final produce from the same batch as the supplied sample - this is not possible. 

There is no guarantee that the final produce arriving at the buyer's destination port will be from the sample-supplying factory let alone form the same batch. 

The buyer has the protection of the SGS inspection against the product specification as is in the contract. SGS will reject a shipment and not issue a conformity certificate if the produce is not of International Accepted Specification and Quality Standard. 

The buyer also has the ability by prior arrangement with the seller and at his own account, to be present at time of loading with the seller's representative.

CONTRACT

Never sign a contract unless you are 100% sure that you can perform within the terms and conditions. It is too late if you have signed the contract to return to the seller and ask to have terms and conditions modified.

As SOME contracts carry a 2% PB against the total face value of the contract, so will they carry a 2% contract failure breach clause against non-performance by the buyer. 

You the buyer would without hesitation collect the 2% PB in the event of the seller not performing according to the terms of the contract, you should not express surprise that the reverse is true of the seller. After all said and done, this is a legal document and must be respected as such. 

DO NOT SIGN OR EVEN REQUEST A CONTRACT until you are satisfied that you can progress the prospect to a final conclusion. 

INTERMEDIARY PARTICIPATION

Unless specifically requested by the buyer and committed to in writing, the seller will deal direct with the buyer via it's own infrastructure and representatives. 

Documents such as FCO, Contract etc are confidential to the buyer and seller and will not be shared with a third party. 

Should the buyer require the Introducing Intermediary to be involved at each stage of the process then a letter of authority under the buyers seal will need to be sent direct to the seller naming the third party.

A copy template of the authority letter is available in the main menu - this should be copied and pasted onto the buyer's letterhead, signed and sealed. 

PREVARICATION

This is one of the biggest problems suffered by seller's. Because the Commodities Market is so volatile and reliant on market forces, prevarication often means that by the time the buyer has obtained funding, decided on volume, product origin etc., the market has moved on with prices having changed either for produce or packaging and the whole process has to begin again. 

Always insure that these issues are addressed before you request an FCO or Contract. To do this after the event will only lead to disappointment. 

PROCEDURES 

Buyer submits LOI / ICPO on own letterhead not older than 2 days signed and stamped with official seal.

The LOI / ICPO should contain the following information as a minimum and should follow the format of the attached LOI template where possible:

1. Specification of Produce required.

2. Volume of order.

3. Bulk or Bags.

4.Shipping Details Proposed Volumes.

6.Discharge Rate.

7. Destination Port

8. Target price.

9. Financial instrument

10.Full banking co-ordinates including account number, SWIFT Code, Contact name at bank, Confirming Bank Name and Address if bank issuing LC is not a prime bank.

11.Name of Authorised Contract Signatory.

12. Introducing Accredited Broker Code or Joint Partner Name and e-mail address if applicable.

• Buyer financial capability will be verified prior to issuing the draft contract.
• The seller will issue an FCO for the buyer's signature together with the verbiage of the contract.
• The buyer signs the FCO and provides Proof of Funding with verbiage of Proposed Financial Instrument.
• Upon receipt of the signed FCO, Proof of Funding and Verbiage of Financial Instrument, the Seller issues contract with full banking for signing and sealing.
• Buyer's bank sends pre-advised Agreed Financial Instrument for non-operative 2% PB, POP and Bank Guarantee of Product Availability.
• POP and POF will only be accepted Bank to Bank via SWIFT Banking Procedure.
• Financial Instrument and PB activated as per procedure in contract.
• Shipment will commence within 30 to 45 days from the date the Financial Instrument is activated.

Weekly Crude Palm Oil Report July 15 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week lower due to the unexpected fall in exports demand which stirred more profi t taking activities.

The benchmark FCPO September contract fell RM65 or 3.64 per cent to close at RM3,065 per tonne on Friday from RM3,130 per tonne last Friday.

The trading range for the week was from RM2,995 to RM3,172.

Total volume traded for the week amounted to 153,737 contracts, up 4,685 contracts from the previous week.

The open interest as at Thursday decreased to 94,948 contracts from 107,399 contracts the previous Thursday.

Cargo surveyor ITS released the palm oil export fi gures for the period of July 1 to 10 on Tuesday at 363,975 tonnes, a fall of 13.46 per cent while another surveyor SGS at 331,978 tonnes, a drop of 22.24 per cent from the same period last month.

The demand from the top importing countries like China and European Union countries was unexpected to decline sharply during the first 10 days of July but the palm oil export to India remained strong.

The prospect for palm oil exports in July remained positive with a substantial number of vessels seemed lining up at the major ports in Malaysia to be loaded with palm oil.

The palm oil fundamental remained fi rm with the release of the monthly supply and demand reports from the Malaysia Palm Oil Board (MPOB) and the US Department of Agriculture (USDA) indicating the global edible oils stock remained tight.

MPOB released its monthly reports on Malaysian palm oil’s supply and demand for June 2012 on Tuesday with palm oil stocks were lower at 1.699 million tonnes, a drop of 4.85 per cent from the previous month and below the average estimation of the Reuters poll at 1.73 million tonnes.

The exports in June increased 8.71 per cent to 1.531 million tonnes while the palm oil production rose 6.28 per cent to 1.471 million tonnes.

USDA released its monthly report on soybean supply and demand on Wednesday with soybean ending stocks for 2012/13 fell to 130 million bushels from 140 million bushels while the soybean production is forecasted at 3.050 billion bushels, down from 3.205 billion bushels in the previous report.

The temperature in the US would turn warm again next week with most of the areas reach above 90 degrees Fahrenheit.

Light showers for the past week were not enough to give moisture to the US crops while limited rains were forecasted for the coming week.

The latest weekly crop progress report indicated that 40 per cent of soybean crop was in good to excellent condition as of Sunday, declining from 45 per cent the previous week.

Bursa Malaysia Derivatives will launch the options trading on crude palm oil futures on July 16 to provide another trading tool to the palm oil investors.

Technical View
The benchmark September contract had a good correction last week and we believe the market will be strongly supported at RM2,970 to RM3,000 levels.

The palm oil market will have tendency to rally once the consolidation phase has completed.
The benchmark will change from September to October contract on Monday.

Resistance would be pegged at RM3,193 and RM3,270 while support was set at RM2,970 to RM3,000.

Major fundamental news this coming week
Malaysian export data for July 1-15 by ITS and SGS on July 16 and the export fi gure for July 1-20 by ITS and SGS on July 20.

Courtesy of OPF

 

 

Options Crude Palm Oil Futures (OCPO)

Dear Fellow Traders,


Grab the opportunity to make more profit....

OCPO CONTRACT SPECIFICATIONS
 
CONTRACT CODE
Calls: C OCPO Puts: P OCPO
 
TYPE
European Options

UNDERLYING
Crude Palm Oil futures contract (FCPO)
 
CONTRACT SIZE
One Crude Palm Oil futures contract (of a specified month) of 25 metric tons (MT)
 
TICK SIZE
RM0.50 per MT (RM12.50 per contract)

STRIKE PRICE INTERVALS
Trading shall be conducted for put and call options with striking prices in integral multiples of RM50 per MT. There will be at least 11 strike prices (five are in-the-money, one is at-themoney and five are out-of-the-money).

CONTRACT MONTHS
Monthly (list the third, fourth, fifth and sixth forward months) then alternate months going out 24 months of the FCPO contract. The first spot option contract month will be trading the 3rd month FCPO contract.

DAILY PRICE LIMIT
There will be no daily price limits.

LAST TRADING DAY
The spot options will cease trading at 6.00 pm on the 10th day of every month, or the preceding business day if the 10th is a nonbusiness day. The futures position will be delivered at end-of-day process and will be available for trading on the next day.

EXERCISE
In the absence of contrary instructions delivered to the Clearing House, an option that is in-the money at expiration shall be automatically exercised. Exercise results in a long 3rd month FCPO position, which corresponds with the option’s contract month for a call buyer or a put seller, and a short 3rd month FCPO position for a put buyer or a call seller.

EXPIRATION
Unexercised Crude Palm Oil futures options shall expire at 6.00 pm on the last day of trading.

TRADING HOURS
First trading session: Malaysian time: 10.30 am to 12.30 pm  Second trading session: Malaysian time: 3.00 pm to 6.00 pm

SPECULATIVE POSITION LIMIT
10,000 futures equivalent contracts net long or net short for any single month.
15,000 futures equivalent contracts for all contract months combined.
*Speculative Position Limits are combined together with the FCPO contract.

Weekly Crude Palm Oil Report July 8 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week higher due to the weather concerns in the US and the continuous rising demand for palm oil ahead of the fasting month in Muslim countries.

The benchmark FCPO September contract surged RM110 or 3.64 per cent to close at RM3,130 per tonne on Friday from RM3,020 per tonne last Friday.

The trading range for the week was from RM3,046 to RM3,183.

Total volume traded for the week amounted to 149,052 contracts, up 40,568 contracts from the previous week.

The open interest as at Thursday increased to 107,399 contracts from 94,587 contracts the previous Thursday.

The persistent hot and dry weather in the US scorched crops in the key producing regions especially the corn crop area with the expectation of limited rainfall in the coming weeks.

The temperature in some of the areas reached the triple digit degrees Fahrenheit with excessive heat that persisted until Saturday.

However, there will be a break for the hot and dry weather pattern today with the temperature is expected to decrease about 15 to 20 degrees Fahrenheit, easing a little bit stress on the crops.

Some weather forecasters indicated that the outlook for the 11 to 15 days period would turn even hotter with limited rains.

There would be some showers over the next five days but it would mostly hit the northwestern part of the Midwest.

The US Department of Agriculture (USDA) released its weekly crop progress report on Monday saying that 48 per cent of corn crop was in good to excellent condition, declining from 56 per cent the previous week due to persistent hot and dry weather condition in US while soybean crop was 45 per cent in good to excellent condition, reducing from 53 per cent the previous week.

Cargo surveyor ITS released the palm oil export figures for the full month of June last Saturday at 1,449,280 tonnes, a rise of 4.86 per cent while another surveyor SGS on Monday at 1,463,864 tonnes, an increase of 9.75 per cent from the same period last month.

The demand from the top importing countries like China and India coupled with the Muslim countries like Pakistan and the Middle East was expected to remain strong in July ahead of the coming festive seasons.
A Reuters poll revealed on Friday that Malaysian palm oil stocks in June were expected to reduce 2.2 per cent to 1.73 million tonnes.

Meanwhile, the palm oil exports were estimated to increase 4.3 per cent to 1.46 million tonnes while the production would rise 7.7 per cent to 1.49 million tonnes.

Technical View
The benchmark September contract extended its rally this week due to the weather concern in US but vulnerable for profit taking when the price approached the resistance of RM3,193 and EMA200 line.
Palm oil prices were expected to take a break next week while waiting for the rains development in the US before the price starts to move again.

Resistance was pegged at RM3,193 and RM3,270 while support was set at RM3,030 and RM2,970.

Major fundamental news this coming week
MPOB’s monthly supplydemand report on July 10, Malaysian export data for July 1 to July 10 by ITS and SGS on July 10 and USDA’s monthly supply-demand report on July 11.

Courtesy of OPF