Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives continuously tumbled for the third week due to the anticipation of rising palm oil stocks in the coming months.
The benchmark FCPO
December contract plunged RM131 or 5.15 per cent to close at RM2,415 per
tonne on Friday from RM2,546 per tonne last Friday.
The trading range for the week was from RM2,230 to RM2,560.
Total volume traded for the week amounted to 218,044 contracts, up 25,179 contracts from the previous week.
The open interest as at Thursday decreased to 134,362 contracts from 136,193 contracts the previous Thursday.
surveyor ITS released the palm oil export figures for the full month of
September on Monday at 1,443,836 tonnes, a drop of 0.67 per cent while
another surveyor SGS at 1,433,795 tonnes, an increase of 0.47 per cent
from the same period last month.
A Reuters poll revealed on Friday
that Malaysian palm oil stocks in September were expected to hit a
record high at 2.46 million tonnes, a jump of 16.4 per cent from the
If this figure is realised in the next government
monthly reports, it would surpass the previous record of 2.27 million
tonnes set in November 2008.
According to the poll, palm oil
exports were estimated to increase 5.8 per cent to 1.51 million tonnes
while the production would surge 20 per cent to two million tonnes.
such scenario, the exports growth was too low to offset the sharp rise
in production, resulting the palm oil stocks to hit all-time record
The weekly crop progress report released by US Department of
Agriculture (USDA) on Monday indicated the soybean crop harvest was
reported 41 per cent complete, advancing from 22 per cent the previous
The soybean harvest in US was progressing well without much weather disruption at this current moment.
analysts estimated the US soybean production and yield would turn out
to be better in the coming government monthly reports which would be
released next week.
Palm oil prices got a lift during mid-week on bargain hunting after the market was deeply oversold.
tropical oil prices was also supported when Malaysian Plantation
Industries and Commodities ministry said on Thursday that they would
propose to the cabinet to reduce crude palm oil export taxes from 23 per
cent to between eight per cent to 10 per cent.
This move was
aimed to position Malaysia to be more competitive in the international
palm oil trading compared with the Indonesian rivals and to reduce the
current high palm oil stocks level.
However, the hope of cutting
crude palm oil export taxes faded when the Malaysian cabinet delayed
taking any decision on the proposal on Friday.
The benchmark December contract plunged to a new low of RM2,230 this week, a level not seen since November 2009.
We expect the market to fluctuate wildly at the current level with the radius of RM150 range next week.
However, the whole downtrend seemed not completed yet and more observation is needed.
Resistance would be pegged at RM2,570 and RM2,755 while support was set at RM2,393 and RM2,230.
Major fundamental news this coming week
monthly supply demand report on October 10, Malaysian export data for
October 1 to October 10 by ITS and SGS on October 10 and USDA’s monthly
supply-demand report on October 11.
- courtesy of OPF-