Wednesday, 31 October 2012

FCPO Related News
Crude palm oil futures on Malaysia’s derivatives exchange declined Wednesday in a choppy session as investors stayed on the sidelines ahead of near-term external market developments, market participants said. The benchmark January contract at Bursa Malaysia Derivatives ended 0.2% lower at 2,496 ringgit a ton after moving in a MYR2,492-MYR2,529/ton range.
Trade is likely to remain muted in the near term due to "upcoming macro events, where the transition of power at the Party Congress of China will be a key focus along with the U.S. presidential election. These two events can dictate risk appetite across asset classes, including palm oil," said Ker Chung Yang, investment analyst at Singapore-based brokerage Philip Futures.
Investors are also on the lookout for the release of Chinese manufacturing data Thursday. China is the world’s largest palm oil consumer after India. Palm oil prices ended October on a positive note, with a monthly gain of 1.3%, as a pickup in export demand to Europe and India could help prevent further stock builds in the world’s no. 2 producer. Malaysian exporters with refineries overseas are also shipping as much oil as possible in the next few months, as a duty-free CPO export quota will be discontinued at the end of the year.
Stockpiles in October aren’t likely to surge sharply compared with the rise in supplies in September, Mr. Ker said. "I think firm exports have helped move excess inventories [out of Malaysia]," he added, tipping end-October stockpiles at 2.50 million tons, which would be a modest 0.8% gain from 2.48 million tons in September.
Cargo surveyor SGS (Malaysia) Bhd. said Malaysia exported around 1.57 million tons of palm oil in October, up 9.3% from a month earlier, while another surveyor, Intertek Agri Services, said shipments reached 1.60 million tons, an increase of 11%.          [Dow Jones Newswire]
"Based on the shipment number, we will still end up with a higher stockpile because October's production is still very high," said OSK Research analyst Alvin Tai. "Exports rising higher month-on-month is not surprising, but the quantum still needs to be stronger."
Palm oil dropped to a two-week low earlier this week after its biggest rival and top producer Indonesia planned to lower monthly export taxes in November after international prices fell this month. The lower taxes will lift margins for Indonesians and shift demand away from competing Malaysian products.
Officials in Jakarta said they will not alter their tax structure which is aimed at driving its domestic palm oil downstream industry. "The export tax structure is progressive and it has been adjusted to fluctuated palm oil prices in the international market," director general of agriculture-based industry Benny Wachjudi said at an industry meeting. "It is very different from the Malaysian government's export tax policy. I am sure Malaysian export tax policy will not last long because it is not adjusted to the development on palm oil prices in the international market."
U.S. soybeans rose on Thursday for a second day, supported by concerns over South American production and rumours of renewed Chinese demand. U.S. gasoline futures prices rose on Wednesday on concerns about East Coast supply shortages as the energy sector struggled to restore operations disrupted by massive storm Sandy. U.S. soyoil for December delivery inched up 0.7 percent in late Asian trade. The most-active May 2013 soybean oil contract on the Dalian Commodity Exchange rose 0.7 percent.
Asian shares fell on Thursday as investors waited for China's official manufacturing PMI for insight into whether growth in the world's second largest economy was bottoming out. Most commodities eked out small gains on Wednesday as markets started to recover from mammoth storm Sandy, but the sector ended the month weaker, with its biggest decline in five months. On Wednesday, Brent December crude oil fell 38 cents to settle at $108.70 per barrel. For the month, Brent fell 3.2 percent. U.S December crude rose 56 cents to settle at $86.24 a barrel, but stumbled 6.5 percent in October.     
Technicals showed that the bearish target of 2,379 ringgit per tonne for Malaysian palm oil has been adjusted to 2,468 ringgit based on its falling speed, said Reuters market analyst Wang Tao. Today’s Support and Resistance for benchmark January is located around 2490 and 2530  respectively.

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