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.
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-