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-

Market Intelligence Crude Palm Oil 24th January, 2013

Market Intelligence

CPO prices eased on profit booking by traders. Prices were also influenced by a fall in spot market demand. Speculators offloaded positions in tandem with weakening trend in other Edible Oils. Prices declined on concerns that exports from Malaysia may decrease this month as China is buying less after tightening quality regulations on imports.

The benchmark price of Crude Palm Oil was raised today by India. This move was done as part of efforts to curb overseas purchases and protect domestic Oilseed farmers. The government last week decided to impose a tax in order to prevent a flood of cheap Palm Oil imports from Malaysia and Indonesia, which were previously tax-free.

India's imports of Palm Oil have surged in the past few months after Indonesia and Malaysia cut exports taxes to reduce their large stocks. Global Edible Oil importers are likely to increase purchases of low priced Palm Oil in coming months, turning away from Soy Oil. Palm Oil is much cheaper than domestic branded vegetable oils and production is low because local mills lack the sophistication and infrastructure to boost output.

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-