Sunday, August 12, 2012

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

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