Sunday, September 16, 2012

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-

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