Tuesday, 4 December 2012
FCPO Related News (Wed, Dec 5)
KUALA LUMPUR, Dec 4 (Reuters) - Malaysian palm oil futures
fell to its lowest in more than three weeks on Tuesday as
investors fret over the prospects of another month of record
stocks in the world's No.2 producer.
Spot December contract was trading at a 8 percent discount
to the benchmark February futures, signalling oversupply and
keeping investors on edge although seasonally slowing output and
Chinese demand should curb stockpiles.
Record high stocks in Indonesia and Malaysia will see palm
oil futures post their worst annual performance since the
financial crisis in 2008. Palm oil prices have lost nearly 28
percent so far this year also on the deepening euro zone debt
crisis affecting global economic growth.
"There is plentiful stock around -- that's the reason why
the market is still technically weak. The local front is
bearish," said a trader with a foreign commodities brokerage.
"Exports are holding quite well, the demand is still strong.
But unless you see a draw down in inventory, the market will be
under pressure," he added.
The benchmark February contract on the Bursa
Malaysia Derivatives Exchange fell as much as 2,279 ringgit per
tonne, the lowest since Nov. 12, before closing at 2,298 ringgit
($756) per tonne.
Total traded volumes surged to 42,981 lots of 25 tonnes
each, nearly doubling from the usual 25,000 lots.
Technicals showed that palm oil would revisit its Nov. 12
low of 2,220 ringgit per tonne, said Reuters market analyst Wang
Malaysian crude palm oil exports are expected to rise in the
next few weeks thanks to stronger demand from China ahead of
Lunar New Year celebrations in February, and stricter import
rules next year.
"We have assumed crude palm oil exports to increase by 5
percent to 1.85 million tonnes in November as Chinese traders
are expected to stock up," Kenanga Investment Bank analyst Alan
Lim said in a note to clients.
Kenanga expects inventory levels to "remain close to the
very high level of 2.5 million tonnes" and keep crude palm oil
prices below 2,500 ringgit in the near term.
Weak manufacturing data from the United States renewed
concerns of slowing demand from the world's biggest oil
consumer, offsetting optimistic factory data issued by China a
Brent crude oil slipped towards $110 a barrel on Tuesday as
weak manufacturing data and protracted U.S. budget negotiations
fanned concerns about the health of the global economy and the
prospects for energy demand.
In palm oil's competing markets, U.S. soyoil for December
delivery edged up 0.2 percent. The most active May 2013
soybean oil contract on the Dalian Commodity Exchange
rose 0.1 percent.