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