Sunday, July 15, 2012

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

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