Weekly Crude Palm Oil Report January 27 2013

Crude palm oil futures (FCPO) on Bursa Ma­laysia Derivatives end­ed the week higher, supported by weather concern in South America and firm soybean oil prices.

The benchmark FCPO April contract rose RM45 or 1.88 per cent to settle at RM2,445 per tonne on Friday from RM2,400 per tonne last Friday.

The trading range for the week was from RM2,404 to RM2,488.

Total volume traded for the week amounted to 146,967 con­tracts, down 56,208 contracts from the previous week.

The open interest as at Wednesday increased to 185,630 contracts from 182,124 contracts the previous Thurs­day. The palm oil market ral­lied during the beginning of the week due to dry weather concerns in South America.

The market participants were very sensitive to any weather change during these few months as the soybean crops in South America are entering the critical planting development phase.

The weather conditions in South America were generally favourable for soybean crops at the beginning of the year.

The weather started to change to hot and dry pat­tern for the past two weeks drew attention of the market participants.

If timely rains appear in the next two weeks, soybean crops could recover from the current condition.

Some weather forecast re­ports showed that there would be beneficial rains in South America next week, capping further gains in soybean complex and prompted some speculators to take profits off the table.

On the other hand, Malaysia was also having some weather problems where consistent heavy rains were falling in key palm oil producing states like Pahang and Johor.

These two states alone produced about 30 per cent of the total palm oil production in Malaysia.

There was no serious disruption or damage to the palm oil production at the current moment but close monitoring on the weather pattern would be observed from time to time.

On the demand side, the exports were slowly improv­ing but not strong enough to offset the high production levels.

The exports to top import­ing countries remained lacklustre especially to the European Union countries due to seasonal factor.

Cargo surveyor ITS re­leased the palm oil export figures for the period of January 1 to 25 on Friday at 1,102,585 tonnes, a drop of 14.11 per cent while another surveyor SGS at 1,104,890 tonnes, a fall of 14.60 per cent from the same period last month.

The Indian government has raised its base price for crude palm oil imports to US$802 per tonne on Wednes­day on top of the 2.5 per cent import tax implemented the previous week.

Again, the Indian govern­ment’s move was to protect the local industry and to avoid excessive cheap palm oil supplies in their market. The Malaysian markets will be closed on Monday and Fri­day celebrating Thaipusam and Federal Territory Day respectively.

Technical View

The benchmark April con­tract was slowly crawling up this week and the technical indicators were improving to supportive signals.

If the market is able to stand firm above RM2,450 next week, the palm oil prices will have high poten­tial to go up.

If the market is able to further break RM2,490 level, the bull trend may resume in the medium term.

Resistance would be pegged at RM2,450 and RM2,524 while support was set at RM2,330 and RM2,280.

Major fundamental news this coming week

Malaysian export data for January 1 to 31 by ITS and SGS on January 31.

-courtesy of OPF-

Weekly Crude Palm Oil Report January 20 2013

Crude palm oil futures (FCPO) on Bursa Ma­laysia Derivatives end­ed the week higher in tandem with the rise in soybean oil prices and the anticipation of lower palm oil production in January.

The benchmark FCPO April contract rose RM34 or 1.44 per cent to settle at RM2,400 per tonne on Friday from RM2,366 per tonne last Friday.

The trading range for the week was from RM2,356 to RM2,444.

Total volume traded for the week amounted to 203,175 con­tracts, down 30,477 contracts from the previous week.

The open interest as at Thursday increased to 182,124 contracts from 173,776 con­tracts the previous Thurs­day.

The weather in Argentina and southern Brazil turned drier this week had caused some concerns among the market participants. Even the situation was not serious yet, it raised concerns of the on-going dryness there.

The hot and sunny weather was initially favoured after months of heavy rains and floods in Argentina. How­ever, the crops fields were started to get too dry there­after.

The prospects for a large soybean crop in Brazil was still intact with some ana­lysts revised their forecast higher.

Most analysts predicted the soybean production in Brazil to be in the range of 82.5 mil­lion to 84 million tonnes.

On the other hand, palm oil prices were unable to move up much due to poor export demand and an increase in Indian import tax on crude edible oils.

Cargo surveyor ITS re­leased the palm oil export figures for the period of January 1 to January 15 on Tuesday at 570,510 tonnes, a drop of 20.74 per cent while another surveyor SGS at 571,481 tonnes, a fall of 22.20 per cent from the same pe­riod last month.

The demand from China and European Union coun­tries remained significantly low.

There will be a visit by the officials from China to Malaysia end of January, opening up the opportu­nity to get more insights on the new quality control imposed by the Chinese government.

India implemented a 2.5 per cent import duty on crude edible oils on Thurs­day which could dampen the demand for crude palm oil.

This move by the Indian government was to protect the interest of its local oilseed farmers.

However, the import duty imposed was less than the earlier expectation of five per cent.

The Malaysian govern­ment announced on Tues­day that its crude palm oil export tax for February would be remained at zero per cent, hoping to boost more demand for the tropi­cal oil.

The US grain markets will be closed on Monday celebrating Martin Luther King Junior day while the Malaysian markets will be closed on Thursday for Prophet Muhammad’s Birthday.

Technical view

The benchmark April con­tract was basically trapped in a range market this week. The market will remain in the sideway of RM2,330 to RM2,450 levels until there is a significant break out from the current range.

Resistance would be pegged at RM2,450 and RM2,524 while support was set at RM2,330 and RM2,280.

Major fundamental news this coming week

Malaysian export data for January 1 to January 20 by ITS and SGS on January 21 and the export figures for January 1 to January 25 by ITS and SGS on Janu­ary 25.
 

-courtesy of OPF-

Weekly Crude Palm Oil Report January 13 2013

Crude palm oil futures (FCPO) on Bursa Ma­laysia Derivatives plunged this week due to bearish fundamental reports released during the week.

The benchmark FCPO March contract tumbled RM101 or 4.09 per cent to close at RM2,366 per tonne on Friday from RM2,467 per tonne last Friday. The trading range for the week was from RM2,332 to RM2,476.

Total volume traded for the week amounted to 233,652 contracts, up 88,390 contracts from the previous week.

The open interest as at Thursday increased to 173,776 contracts from 164,839 con­tracts the previous Thurs­day.

MPOB released its bearish monthly reports on Malaysian palm oil’s supply and demand for December 2012 on Thurs­day with palm oil stocks were continuously higher at 2.628 million tonnes, an increase of 2.41 per cent from the previous month and was far above the average estimation of Reuter’s poll at 2.5 million tonnes.

According to the report, the exports in December dropped slightly 0.70 per cent to 1.65 million tonnes while the palm oil production reduced 5.86 per cent to 1.78 million tonnes.

Although the fall in exports was less than the drop in production for December, the absolute figure for production was still higher than the ex­ports, contributing to higher palm oil stocks.

The palm oil demand is seasonally weak during win­ter time as palm oil tends to crystallise in colder weather. On the other hand, the produc­tion was seen falling due to the effect of heavy rains during this time of the year.

Cargo surveyor ITS re­leased the palm oil export figures for the period of January 1 to January 10 on Thursday at 373,462 tonnes, a plunge of 25.27 per cent while another surveyor SGS at 343,081 tonnes, a dive of 33.57 per cent from the same period last month.

The main reason of the weak exports data was due to low demand from top importing countries like China and European Union countries.

Both countries’ imports slumped 58 per cent and 67 per cent respectively during the first 10 days of January compared with the same period last month.

Most Chinese importers were abducting the wait and see attitude as to monitor the impact of the stringent quality on imported palm oil products by the Chinese government.

In addition, the effect of zero per cent export tax on crude palm oil by the Malaysian government has yet to boost any demand for the tropical oil.

The Malaysian govern­ment is expected to reveal its crude palm oil export tax for February next Tuesday.

Meanwhile, USDA re­leased its monthly report on soybean supply and demand on Friday with US soybean production for 2012 was estimated at 3.015 billion bushels, up from 2.971 billion in the previous report.

Technical View

The benchmark March contract broke all the major supports this week espe­cially piercing through the uptrend channel support and EMA 50 line easily on Monday.

The unsustainability to stand above EMA 50 sup­port has pushed the market back to sideway trend in the medium term until further new development in the fundamental factors.

The benchmark contract will change from March to April month next Wednes­day. Resistance was pegged at RM2,430 and RM2,524 while support was set at RM2,330 and RM2,280.

Major fundamental news this coming week

Malaysian export data for January 1 to January 15 by ITS and SGS on Janu­ary 15.

-Courtesy of OPF-

Weekly Crude Palm Oil Report January 6 2013

Crude palm oil futures (FCPO) on Bursa Ma­laysia Derivatives de­clined this week due to lower palm oil export demand for December and the prospect of larger soybean production in South America.

The benchmark FCPO March contract fell RM27 or 1.08 per cent to close at RM2,467 per tonne on Friday from RM2,494 per tonne last Friday.

The trading range for the week was from RM2,433 to RM2,524.

Total volume traded for the week amounted to 145,262 contracts, up 39,662 contracts from the previous week.

The open interest as at Thursday decreased to 164,839 contracts from 166,198 con­tracts the previous Thurs­day.

The crude palm oil prices wrapped up the year in a 21 per cent decline in 2012 compared to a 16 per cent fall in 2011 due to record high palm oil stocks, strong production and slug­gish export demand.

The US soybean oil prices on the other hand fell five per cent in 2012, lesser than the 10 per cent decline in 2011 as the US experienced the worst drought in 56 years during summer.

The NYMEX crude oil prices was also facing the same fate as other commodities and was down seven per cent in 2012 against the gain of eight per cent in 2011 due to a slower global economic growth.

Cargo surveyor ITS re­vealed its palm oil export figures for the full month of De­cember on Monday at 1,568,510 tonnes, a drop of 5.69 per cent while another surveyor SGS at 1,518,750 tonnes, a fall of 7.85 per cent from the same period last month.

The growth in exports for December was mainly contributed by India and Pakistan.

However, the slump in demand from China, Euro­pean Union countries and the US was far exceeded the increase in demand from India and Pakistan.

Hence, the exports data for the first 10 days in January will be an important indica­tion as to see the response of the demand after the imple­mentation of zero per cent export tax for crude palm oil in January by the Malaysian government.

In addition, traders would also monitor the impact on palm oil demand from China after the Chinese govern­ment has imposed stricter quality standards on the imported edible oils starting from January 1.

The weather in South America was forecasted to be favourable in the com­ing week.

Some analysts also esti­mated the US Department of Agriculture (USDA) to raise its soybean production in 2012 and to expect a record high of soybean crops in Bra­zil in the coming report.

All these factors would pressure on soybean prices and may dampen the upward momentum of crude palm oil prices.

On the economic front, the US government has finally averted the fiscal cliff issue at a very last minute before the New Year.

Technical View

The benchmark March contract consolidated this week and was waiting for clearer direction from the major fundamental reports to be released next week.

The EMA 50 and the up­trend channel support line will be closely monitored as to determine the strength of the current upward mo­mentum.

Resistance would be pegged at RM2,615 and RM2,755 while support was set at RM2,430 and RM2,350.

Major fundamental news this coming week

MPOB’s monthly supply-demand report on January 10, Malaysian export data for January 1 to 10 by ITS and SGS on January 10 and USDA’s monthly supply-demand report on January 11.

Weekly Crude palm Oil Report November 25 2012

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.


Technical View

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-

Weekly Crude Palm Oil Report November 18 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives soared this week due to the lower than expected palm oil stocks build-up in October.

The benchmark FCPO February contract surged RM113 or 4.88 per cent to close at RM2,429 per tonne on Friday from RM2,316 per tonne last Thursday.

The trading range for the week was from RM2,220 to RM2,439.

Total volume traded for the week amounted to 114,447 contracts, down 84,482 contracts from the previous week.

The open interest as at Wednesday increased to 139,876 contracts from 138,208 contracts the previous Thursday.

MPOB released its bullish monthly reports on Malaysian palm oil’s supply and demand for October 2012 on Monday with palm oil stocks were slightly higher at 2.509 million tonnes, an increase of 1.11 per cent from the previous month and was far below the average estimation of the Reuter’s poll at 2.67 million tonnes.
The exports in October jumped 16.16 per cent to 1.758 million tonnes while the palm oil production reduced 3.28 per cent to 1.938 million tonnes.

The high palm oil exports were mainly contributed by the European Union countries with an increase of 70 per cent in their palm oil imports in October compared with the previous month.

The higher exports demand and lower production growth managed to slowdown the build-up in palm oil stocks in October.

If this trend continues in the coming month, the palm oil stocks will start turning down from the record high levels.

Cargo surveyor ITS released its latest palm oil export figures for the period of November 1 to November 15 on Friday at 769,087 tonnes, a slip of 0.06 per cent from the same period last month.

The exports growth in the last five days of November was sluggish probably due to two public holidays this week.

The Malaysian market was closed on Tuesday and Thursday, celebrating Deepavali and Awal Muharram respectively.

However, both cargo surveyors, ITS and SGS released good export data for the first ten days of November.
ITS indicated the export figures for the period of November 1 to November 10 on Monday at 518,688 tonnes, a surge of 15.62 per cent while another surveyor SGS at 514,798 tonnes, a jump of 22.35 per cent from the same period last month.

The rise in palm oil exports this month was mainly contributed by China as the Chinese importers were scrambling to stock up the refined palm products before the Chinese government implements stricter specifications on refined palm oil’s quality effective from January 1, 2013 onwards.

The increase in exports to China would be expected to extend until the end of this year with the estimation of more than 700,000 tonnes of palm oil would be exported to the country each month in November and December.

Technical View
The benchmark February contract surged this week after the market briefly broke the low of RM2,230 to reach the new low of RM2,220.

Thereafter, the market rebounded more than RM200 from the new low due to short covering activities.
In our view, the market is currently forming a bottom for the next rally.

Resistance would be pegged at RM2,490 and RM2,634 while support was set at RM2,220 and RM2,130.

Major fundamental news this coming week
Malaysian export data for November 1 to November 5 by SGS on November 19 and the export figure for November 1 to November 20 by ITS and SGS on November 20.

- Courtesy of OPF-

Weekly Crude Palm OIl Report November 4 2012

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.

The 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.
On 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.

There 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.

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

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.

- Courtesy of OPF-

Weekly Crude Palm Oil Report October 28 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week higher on better export demand and short covering activities ahead of long holidays in Malaysia.

The benchmark FCPO January contract surged RM102 or 4.08 per cent to close at RM2,603 per tonne on Thursday from RM2,501 per tonne last Friday.

The trading range for the week was from RM2,497 to RM2,615.

Total volume traded for the week amounted to 127,826 contracts, down 71,522 contracts from the previous week.

The open interest as at Wednesday increased to 126,334 contracts from 125,799 contracts the previous Thursday.

Cargo surveyor ITS released the palm oil export figures for the period of October 1 to 25 on Thursday at 1,300,495 tonnes, a rise of 11.09 per cent while another surveyor SGS at 1,280,652 tonnes, an increase of 9.45 per cent from the same period last month.

On the supply side, some traders estimated the palm oil production in October would be slightly down to about five per cent.

The production during the fourth quarter 2012 should be toppish especially approaching the monsoon season end of the year.

An industry group in Indonesia indicated that the Indonesian government may cut its export tax for crude palm oil from 13.5 per cent to 10.5 per cent for November in its monthly adjustment for the export duty.
This may counter the effect by the Malaysian government to reduce its export tax for crude palm oil in its recent announcement.

The weekly crop progress report released by US Department of Agriculture on Monday indicated the soybean crop harvest was reported 80 per cent complete, advancing from 71 per cent from the previous week.

On the economic front, the manufacturing industry in China showed improvement with the data released on Wednesday was better than the market expectation.
This boosted the hope that the world second largest economy is recovering, and soon to demand for more commodities.

In addition, the US economic growth was also pointing to recovery with the latest third quarter gross domestic product data released was at two per cent, higher than the average analysts’ estimation of 1.8 per cent.

The coming November would be an interesting month as the world’s largest two economies, the US would be having presidential election, while China is in the transition of changing the country’s leader.
This may give lots of uncertainties and volatilities to the market movement towards the end of the year especially the measurements on the US financial fiscal cliff by the new president and the new policies by the new leaders to boost their country’s economy.

Technical View
The benchmark January contract continued to surge this week after the market broke the RM2,530 resistance.

Market is currently remained in the uptrend channel with strong resistance to be met in between RM2,634 and EMA50 line.

Focus would be put at this range as to see whether the market manages to break further up? We believe the market is going to correct soon before forming a strong base for the next uptrend.

Resistance would be pegged at RM2,634 and RM2,755 while support was set at RM2,361 and RM2,230.

Weekly Crude Palm Oil Report October 21 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended fl at this week, digesting the impact of newly announced export tax structure by the Malaysian government and analysing the mixed views by the top industry analysts during an industry conference on Tuesday.

The benchmark FCPO December contract rose RM1 or 0.04 per cent to close at RM2,501 per tonne on Friday from RM2,500 per tonne last Friday.

The trading range for the week was from RM2,417 to RM2,524.

Total volume traded for the week amounted to 199,348 contracts, down 4,237 contracts from the previous week.

The open interest as at Thursday decreased to 125,799 contracts from 141,841 contracts the previous Thursday.

After the announcement on the new crude palm oil export tax structure by the Malaysian government last Friday, palm oil producers requested the government to reconsider issuing tax-free crude palm oil quota especially to those companies which have refineries overseas.

These companies were depending on the tax-free crude palm oil export quota to maintain the profits of their refineries overseas.

With the abolishment of the tax-free crude palm oil export quota, it would definitely erode some of their gains and competitiveness in other regions.

Dorab Mistry, one of the leading edible oils’ analysts, said in an industry conference on Tuesday that palm oil prices could fall to RM2,200 per tonne within the next four to six weeks due to high palm oil stocks in Malaysia which may exceed three million tonnes by end of this year.

Another renowned analyst, Thomas Mielke, maintained his view that the wide discount between palm oil and other vegetable oils’ prices was unsustainable due to shortage in other vegetable oils supplies which would increase the demand for palm oil to fill the supply gap.

He forecasted palm oil prices to recover to RM3,300 per tonne somewhere in March to May next year.
Another analyst, Dr James Fry, said the premium of palm oil prices over crude oil prices in Europe collapsed from approximately US$300 per tonne at the beginning of this year to nearly par recently could boost the appeal to use palm oil as the feedstock to produce biodiesel.

According to Fry, the narrow price difference between palm oil and crude oil currently would become more feasible to produce biodiesel and direct burning of vegetable oils without any subsidy by the local government.

Cargo surveyor ITS released the palm oil export figures for the period of October 1 to 15 on Monday at 769,534 tonnes, a jump of 13.15 per cent while another surveyor SGS at 768,550 tonnes, a surge of 16.28 per cent from the same period last month.

The Malaysian market will be closed on Friday celebrating Hari Raya Haji.
  
Technical view
The benchmark January contract ended fl at this week and met a strong resistance at RM2,530 level despite strong export growth for the first half of October.

In our opinion, the current rebound may end around this level and the failure to break above RM2,530 level next week will bring palm oil price down again for the last wave to form the bottom of the downtrend.
Resistance would be pegged at RM2,530 and RM2,634 while support was set at RM2,361 and RM2,230.

Major fundamental news this coming week
Malaysian export data for October 1 to October 20 by SGS on October 22 and the export data for October 1 to October 25 by ITS and SGS on October 25.

-Courtesy of OPF-

Weekly Crude Palm Oil Report October 14 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week higher in the anticipation of palm oil export tax cut in Malaysia which also spurred technical buying in a deeply oversold condition.

The benchmark FCPO December contract rose RM85 or 3.52 per cent to close at RM2,500 per tonne on Friday from RM2,415 per tonne last Friday.

The trading range for the week was from RM2,361 to RM2,529.

Total volume traded for the week amounted to 203,585 contracts, down 14,659 contracts from the previous week.

The open interest as at Thursday increased to 141,841 contracts from 134,362 contracts the previous Thursday.

The Malaysian government announced on Friday that they would reduce the crude palm oil export taxes and scrapped the current free tax crude palm oil export quota effective from January 1 next year.

The new export taxes would be set based on the price range of crude palm oil in that particular month and the taxes would vary on monthly basis.

The concept of the new export taxes in Malaysia was similar to the Indonesian counterparts as to position Malaysia in a more competitive level in the international palm oil trading compared with Indonesia.

Cargo surveyor ITS released the palm oil export fi gures for the period of October 1 to 10 on Wednesday at 448,624 tonnes, a slip of 1.03 per cent while another surveyor SGS at 420,758 tonnes, a drop of 8.72 per cent from the same period last month.

Malaysia Palm Oil Board (MPOB) released its bearish monthly reports on Malaysian palm oil’s supply and demand for September 2012 on Wednesday with palm oil stocks were sharply higher at 2.481 million tonnes, a jump of 17.43 per cent from the previous month and was slightly above the average estimation of the Reuters’ poll at 2.46 million tonnes.

The exports in September rose 4.49 per cent to 1.506 million tonnes while the palm oil production soared 20.43 per cent to 2.004 million tonnes.

The strong growth in production which was more than four-time faster than the increase in exports demand, pushed the palm oil stocks level to all time record high in September.
The high stocks level was pretty much factored in during the plunge of palm oil prices in the past few weeks.

USDA released its monthly report on soybean supply and demand on Thursday with soybean ending stocks for 2012/13 increase to 130 million bushels from 115 million bushels while the soybean production was forecasted at 2.86 billion bushels, up from 2.634 billion bushels in the previous report.

Even though both soybean production and stocks level were higher than the previous report, most analysts viewed it as supportive as the stock-to-use ratio remained low in 46 years.
The continuous robust soybean demand from China was also the major factor of the above view.

Technical View
The benchmark December contract rebounded this week after the fundamental reports released were very much in tandem with the market expectation.

The benchmark contract would change from December to January month next Tuesday.
We expected the market to have some more room to move upward before tumbling down again to form the bottom of the downtrend.

Resistance would be pegged at RM2,570 and RM2,634 while support was set at RM2,361 and RM2,230.

Major fundamental news this coming week
Malaysian export data for October 1-15 by ITS and SGS on October 15 and the export data for October 1-20 by ITS on October 20.

-Courtesy of OPF-

Weekly Crude Palm Oil Report October 7 2012

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.

Cargo 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 previous month.

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.

With 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 high.

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 week.

The soybean harvest in US was progressing well without much weather disruption at this current moment.
Some 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.
The 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.

Technical View
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
MPOB’s 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-

Weekly Crude Palm Oil Report September 23 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives dived this week following the sharp plunge in US soybean prices, the anticipation of rising palm oil stocks and the continuation of weak economic data in China.

The benchmark FCPO December contract plunged RM174 or 5.93 per cent to close at RM2,762 per tonne on Friday from RM2,936 per tonne last Friday.

The trading range for the week was from RM2,755 to RM2,894.

Total volume traded for the week amounted to 184,766 contracts, down 14,365 contracts from the previous week.

The open interest as at Thursday increased to 131,290 contracts from 120,285 contracts the previous Thursday.

Crude palm oil prices opened the week sharply lower after the long weekend break, following the daily down-limit in soybean prices on Monday.

The soybean complex prices were under tremendous selling pressure this week due to the on-going US harvest and the anticipation of better US soybean yields.

The weekly crop progress report released by US Department of Agriculture (USDA) on Monday indicated the soybean crop harvest was reported 10 per cent complete, advancing from four per cent the previous week and was well above the average harvest of four per cent for the past five years.

This had driven the funds that were holding large amount of long positions in soybean complex to exit their positions and triggered some speculative selling as well.

The favourable weather in Brazil this month allowed the farmers to start an early soybean planting for their harvest in 2013 also added to the selling pressure.

The preliminary manufacturing data in China for September was showing further contraction for the consecutive of 11-month which may dampen the demand for the global commodities from the world second largest economy.

Cargo surveyor ITS released the palm oil export figures for the period of September 1 to 20 on Thursday at 928,110 tonnes, a jump of 14.61 per cent while another surveyor SGS at 900,450 tonnes, a surge of 12.78 per cent from the same period last month.

The strong export demand failed to turn around the weak market sentiment in palm oil as some traders expected the high production in September would be more than enough to offset the strong demand, leading to rising palm oil stocks which could cross more than 2.2 million tonnes.

Most traders would be waiting for the views from the top industry analysts such as Dorab Mistry, Thomas Mielke and Dr.James Fry on the price outlook for edible oils in year 2012/13 during an industry conference in Mumbai, India from September 22 to 23.

Technical View
The benchmark December contract broke all the major supports and was under significant selling pressure.
The latest chart development painted a bearish view on palm oil prices especially the price broke RM2,820 level and tested the low of RM2,755, a level not seen since October 2011.

If the palm oil prices further broke the RM2,754 level, it will attract more technical selling and long liquidation which may further push the market down for another few hundred ringgit.

The rise above RM2,820 level will pull the market back to sideway consolidation mode.
Resistance would be pegged at RM2,820 and RM2,989 while support was set at RM2,754 and RM2,520.

Major fundamental news this coming week
Malaysian export data for September 1-25 by ITS and SGS on September 25.

-Courtesy of OPF-

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-

Weekly Crude Palm Oil Report September 9 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week sharply lower due to the anticipation of higher palm oil stocks level in August and the current US weather condition had stabilised the crop from further deteriorating.

The benchmark FCPO November contract plunged RM92 or 3.05 per cent to close at RM2,927 per tonne on Friday from RM3,019 per tonne last Friday.

The trading range for the week was from RM2,895 to RM3,100.

Total volume traded for the week amounted to 196,597 contracts, up 60,870 contracts from the previous week.

The open interest as at Thursday decreased to 114,039 contracts from 126,836 contracts the previous Thursday.

Most traders liquidated some riskier positions in the palm oil market ahead of the major fundamental reports to be released next week.

A Reuters poll revealed on Wednesday indicating that Malaysian palm oil stocks were expected to increase 4.5 per cent to 2.09 million tonnes in August from the previous month as the high production outpaced the rise in exports.

According to the poll, the palm oil exports were estimated to surge 11.8 per cent to 1.45 million tonnes while the production would fall three per cent to 1.64 million tonnes.

One of the top industry analysts, Dorab Mistry provided his view on palm oil prices during the Global Commodities Conference – Asia 2012 in Singapore on Thursday saying that palm oil prices was hard to be bullish given the record palm oil stocks and high production cycle currently which would be expected to hit new peaks in September and October.

He pegged the palm oil prices to be trading between RM2,900 to RM3,300.

Cargo surveyor SGS released the palm oil export figures for the full month of August on Tuesday at 1,427,052 tonnes, a surge of 19.6 per cent from the same period last month.

Most of the rise in exports was mainly to India and China which showed an increase of 81 per cent and 43 per cent respectively compared with the previous month.

The European Central Bank (ECB) unveiled a new bond-buying program named as Outright Monetary Transactions (OMT) on Thursday to ease the eurozone debt crisis.

The announcement by the ECB immediately pressured the Spain and Italian bond yield and triggered the global equities to surge more than two per cent the same day.

The next focus would be on the Federal Open Market Committee meeting which was scheduled on September 12 to 13 on the possibility of any quantitative easing programs to be announced given the disappointing US jobs data released on Friday.

Technical View
The benchmark November contract was noted to face resistance at RM3,100 level and the inability to rise further from that level especially to cross above the EMA 200 line pressured the palm oil market to fall back forming a more complex consolidation phase which may drag for another couple of weeks before a clearer trend is noted.

The red line support will be closely monitored and more observation needed to see how the chart pattern developed from here.

Resistance would be pegged at RM3,193 and RM3,270 while support was set at RM2,895 and RM2,820.

Major fundamental news this coming week
MPOB’s monthly supply demand report on September 10, Malaysian export data for September 1-10 by ITS and SGS on September 10 and USDA’s monthly supply-demand report on September 12.

Courtesy of OPF

Weekly Crude Palm Oil Report 2 September 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week lower due to profit taking and positions squaring activities ahead of the long weekend after the market rose sharply for the past two weeks.

The benchmark FCPO November contract declined RM50 or 1.63 per cent to close at RM3,019 per tonne on Friday from RM3,069 per tonne last Friday.

The trading range for the week was from RM2,978 to RM3,122.

Total volume traded for the week amounted to 135,727 contracts, up 24,498 contracts from the previous week.

The open interest as at Wednesday increased to 129,327 contracts from 123,958 contracts the previous Thursday.

Typhoon Bolaven hit China on Tuesday on a weaker basis in terms of winds and rains which did not bring much harm to the crop production in China.

However, the Tropical Storm Isaac in US was strengthened to Hurricane Isaac Category 1 brought massive rainfalls, strong winds and floods to the US Gulf Coast region over the week, shutting down most of the oil and natural gas drilling platforms and refineries in the area and stalling the local business activities in the region.

The Hurricane Isaac was sighted to move forward and would bring moderate to heavy rainfalls to most of the southern half of US over the weekend.

Some analysts commented the rainfalls came too late to revive the soybean crops in the southern areas but it did bring some relief to the drought stricken region.

However, the heavy rainfalls may also halt the harvesting progress which is on-going currently in those areas.
The weekly crop progress report released by USDA on Monday indicated the soybean crop condition slipped slightly where the soybean crop was reported 30 per cent in good to excellent condition, down from 31 per cent the previous week.

Cargo surveyor ITS released the palm oil export fi gures for the full month of August on Friday at 1,453,544 tonnes, a surge of 17.73 per cent from the same period last month.

Earlier, cargo surveyor SGS released the palm oil export fi gures for the period of August 1 to 25 on Monday at 1,051,541 tonnes, an increase of 6.56 per cent from the same period last month.

The Federal Reserve chairman Ben Bernanke hinted on the possibility and the need of more quantitative easing programs during his speech in Jackson Hole on Friday given the current high unemployment and stagnation in the US labour market.

His remarks lifted the sentiment in the overnight US equities market.

Traders would also focus on the outcome of the European Central Bank’s monetary policy next Thursday to gauge the development of the eurozone debt crisis.

The US market will be closed on Monday celebrating the Labour Day.

Technical View
The benchmark November contract retraced this week after the sharp rally for the past two weeks as we had mentioned earlier.

The market covered the gap nicely and we expect the uptrend would start anytime soon.
Resistance would be pegged at RM3,193 and RM3,270 while support was set at RM2,973 and RM2,820.

Major fundamental news this coming week
Malaysian export data for the full month of August by SGS on September 3 and the Reuters’ poll on the August’s palm oil supply and demand.

Courtesy of OPF

Weekly Crude Palm Oil Report August 26 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives soared this week due to the outlook of lower crop production in US and the anticipation of better demand for crude palm oil in the coming weeks.
The benchmark FCPO November contract jumped RM107 or 3.61 per cent to close at RM3,069 per tonne on Friday from RM2,962 per tonne last Friday.

The trading range for the week was from RM3,010 to RM3,100.

Total volume traded for the week amounted to 111,229 contracts, down 42,668 contracts from the previous week.

The open interest as at Thursday increased to 123,958 contracts from 115,338 contracts the previous Thursday.

According to the crop tour conducted by Pro Farmer this week, the US corn and soybean production was estimated to be lower than the US Department of Agriculture (USDA) report due to the worst drought condition hitting the region in 56 years.

Pro Farmer pegged the US corn crop for 2012/13 at 10.478 billion bushels against 10.779 billion bushels in the latest USDA monthly report while soybean crop at 2.6 billion bushels versus 2.692 billion bushels in the government report.

Traders were also monitoring on the typhoon development in China coast where Typhoon Bolaven was expected to hit North East of China by the middle of next week.

Typhoon Bolaven might bring heavy rains and flooding to the country’s main producing areas of soybean and corn in which the impact might be potentially harm up to 20 per cent of the crops.

The weekly crop progress report released by USDA on Monday indicated the soybean crop condition further improved slightly where the soybean crop was reported 31 per cent in good to excellent condition, up from 30 per cent the previous week.

The latest weather forecast indicated heavy rains would fall in the Midwest over the weekend but the overall total precipitation remained below the average.

Cargo surveyor ITS released the palm oil export fi gures for the period of August 1 to August 20 on Wednesday at 809,814 tonnes, an increase of 5.96 per cent from the same period last month.

Traders need to monitor closely on the development of the eurozone debt crisis issue from now onwards as there would be lots of news flowing out in September.

One of the key issues would be the Germany’s Constitutional Court rules on the legality of the eurozone bailout fund which was scheduled on September 12.

Other than that, the Federal Open Market Committee (FOMC) meeting on September 12 to September 13 would also be the limelight on the possible announcement of the implementation of the quantitative easing programmes.

The Malaysian market will be closed on Friday celebrating the National Day.
Technical View The benchmark november contract rose sharply this week following the broad gains in the US grain markets.

The break above RM3,000 this week has confirmed the double bottom formation.

However, the market has risen too fast leaving two gaps behind in the chart where there would be a possibility of the market to cover at least one of the gaps.

Nevertheless, the latest chart development indicated the market was set for bull run soon.

Resistance was be pegged at RM3,193 and RM3,270 while support was set at RM2,973 and RM2,820.
Major fundamental news this coming week Malaysian export data for August 1 to August 20 and August 1 to August 25 by SGS on August 27.

-Courtesy of OPF-

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

Weekly Crude Palm Oil Report August 5 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week slightly lower due to the weaker exports demand and the rising palm oil production in July.

The benchmark FCPO October contract slipped RM9 or 0.31 per cent to close at RM2,918 per tonne on Friday from RM2,927 per tonne last Friday.

The trading range for the week was from RM2,905 to RM3,007.

Total volume traded for the week amounted to 124,383 contracts, down 47,485 contracts from the previous week.

The open interest as at Thursday increased to 115,084 contracts from 106,686 contracts the previous Thursday.

The palm oil market was lifted earlier in the week with the anticipation of continuous hot and dry weather pattern in US but the sentiment changed during the mid-week when the weather forecast indicated some beneficial rains would bring relief to some parts of the hot and dry area in the Midwest over the weekend.
There will be forecast for continuous rains late next week and would bring the needed moisture to the soil especially for soybean crop.

Most analysts commented the rains came in too late for the corn but may revive some of the soybean crops as the soybean crops are in the key development period currently.

The weekly crop progress report released by US Department of Agriculture (USDA) on Monday indicated the crop condition further deteriorating with the soybean crop was 29 per cent in good to excellent condition, reducing from 31 per cent the previous week.

The palm oil market was also pressured later of the week when the US Federal Reserve dampened the hope of the implementation of the quantitative easing during the Federal Open Market Committee (FOMC) meeting on Wednesday as the US economic data was not weak enough for them to take further action.

The market was also disappointed with the European Central Bank (ECB) when they failed to take immediate action to tackle the eurozone debt crisis on Thursday versus the ECB chief’s comments that the central bank would do everything to defend the euro in the previous week.

Cargo surveyor ITS released the palm oil export figures for the full month of July on Tuesday at 1,234,603 tonnes, a drop of 14.81 per cent while another surveyor SGS at 1,193,227 tonnes, a fall of 18.49 per cent from the same period last month.

The Malaysian government announced on Wednesday to increase the duty-free crude palm oil exports quota to 5.6 million tonnes from 3.6 million tonnes in a temporary move to counter the weak exports demand and to manage the palm oil stockpiles during the high production cycle.

Technical View
The benchmark October contract was trading sideways this week and very likely would remain the same for next week as most traders would position themselves ahead of the key major reports to be released next Friday.

The downside of the market may be limited as most analysts anticipated tighter global soybean stocks in next Friday’s report while the market would be capped at higher level due to the potential rains forecast later of next week.

Resistance would be pegged at RM3,007 and RM3,067 while support was set at RM2,880 and RM2,838.

Major fundamental news this coming week
MPOB’s monthly supply demand report on August 10, Malaysian export data for August 1-10 by ITS and SGS on August 10 and USDA’s monthly supply-demand report on August 10.

Courtesy of OPF

Weekly Crude Palm Oil Report July 29 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives plunged this week due to the forecast of improved weather condition in US and the resurfacing of the eurozone debt crisis.

The benchmark FCPO October contract tumbled RM115 or 3.78 per cent to close at RM2,927 per tonne on Friday from RM3,042 per tonne last Friday. The trading range for the week was from RM2,880 to RM3,008.

Total volume traded for the week amounted to 171,868 contracts, up 21,547 contracts from the previous week.  The open interest as at Thursday increased to 106,686 contracts from 103,992 contracts the previous Thursday.

The palm oil market suffered a double whammy this week as the weather forecast indicated improved rains in the US drought stricken areas and the debt crisis condition in Spain worsened approaching for seeking bailout.

Rains moved across to most parts in the US Midwest this week, providing some beneficial soil moisture for the crops. However, the amount of rains needed was still light especially in the central and western of Midwest.

Rains are very important in the coming few weeks to revive the potential yield of soybean as the soybean crop is entering the crucial growing phase of pods setting and filling.

The rains event this week was only temporary bringing relief from the current heat and dryness stress to soybean crop and the crop condition would be very much dependant on the weather condition these coming few weeks.

The latest weather forecast report indicated the warm and dry weather would return in the US next week coupled with limited rains sighted sparked the traders to short cover and added back some risk premium to soybean prices before the week ended.

The weekly crop progress released by US Department of Agriculture (USDA) on Monday indicated the crop condition in the US further deteriorating. The soybean crop was 31 per cent in good to excellent condition, reducing from 34 per cent the previous week.

The palm oil export demand remained weak even though there was a slight improvement in the latest exports data released.
 
Cargo surveyor ITS released the palm oil export figures for the period of July 1 to July 25 on Wednesday at 1,026,153 tonnes, a drop of 14.25 per cent while another surveyor SGS at 986,829 tonnes, a fall of 18.6 per cent from the same period last month.

With the weak exports demand currently, some traders anticipated the palm oil stocks would be easily cross above 1.8 million tonnes from 1.7 million tonnes in the previous month as they forecasted the production in July would increase double digit percentage.

Technical View 
The benchmark October contract had broken our major support at RM2,970 to RM3,000 levels this week which had turned the market from bull to neutral.

Weather in the US would remain the main focus in the coming weeks’ price movement and the market could be volatile as what we had mentioned last week.

If hot and dry weather persisted, the market would be very likely to break above RM3,000 again but if timely rains could reach most of the needed dry areas in the US, the market may test the previous low of RM2,838.

Resistance was pegged at RM2,986 and RM3,067 while support was set at RM2,838 and RM2,754.

Major fundamental news this coming week
Malaysian export data for full month of July by ITS and SGS on July 31.

Courtesy of OPF

Weekly Crude Palm Oil Report 22 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week slightly lower due to the continuous fall in exports demand and the anticipation of higher palm oil production in July.

The benchmark FCPO October contract fell RM23 or 0.75 per cent to close at RM3,042 per tonne on Friday from RM3,065 per tonne last Friday.

The trading range for the week was from RM2,986 to RM3,161.

Total volume traded for the week amounted to 150,321 contracts, down 3,416 contracts from the previous week.

The open interest as at Thursday decreased to 103,992 contracts from 94,948 contracts the previous Thursday.

Cargo surveyor ITS released the palm oil export fi gures for the period of July 1 to 20 on Friday at 764,273 tonnes, a plunge of 22.95 per cent while another surveyor SGS at 768,555 tonnes, a dive of 22.89 per cent from the same period last month.

Most of the fall in exports demand was due to the sharp drop in exports to China while the demand from the Muslim countries like Pakistan, India and Middle East were seem slowing down, approaching the fasting month which would start from this weekend onwards.

Some traders anticipated the palm oil production in July would start increasing until October as we had entered the high production cycle for palm oil during this time of the year.

With the poor performance from the exports demand recently, the palm oil stocks would be expected to increase from July onwards.

However, we expected the increase in palm oil production would not be high as the productivity of the workers in the fi eld would be low entering the fasting month and thereafter most of the workers would be away celebrating the Muslim festival a month later.

The continuous hot and dry weather in the US had started to cause damage to some of the corn and soybean crops in certain areas.

Based on some weather forecast reports, the hot and dry weather pattern would be expected to persist especially in the central and western Midwest until early of August while limited and scattered rains would appear in the northern and eastern Midwest.

The US Department of Agriculture (USDA) released its weekly crop progress report on Monday saying that 31 per cent of corn crop was in good to excellent condition as of Sunday, declining from 40 per cent the previous week while soybean crop was 34 per cent in good to excellent condition, reducing from 40 per cent the previous week.

The above factors had widened the palm oil discount against the soybean oil prices from the usual US$100 per tonne to above US$230 per tonne lately and some traders expected this spread to further widen to US$300 per tonne if the weather condition in the US kept worsening.

Technical View
We maintained our view that the palm oil market would be strongly supported at RM2,970 to RM3,000 levels and will have the tendency to rally once the consolidation phase has completed.

The market would be expected to be volatile in the coming weeks especially weather is the main factor driving the price movement.

Resistance would be pegged at RM3,193 and RM3,270 while support was set at RM2,970 to RM3,000.

Major fundamental news this coming week
Malaysian export data for July 1-25 by ITS and SGS on July 25.

Courtesy of OPF