FCPO Related News (Fri, Feb 15)

Crude palm-oil futures on Malaysia’s derivatives exchange edged down Thursday. They struggled for direction because of a growing surplus of vegetable oils and improving export demand for palm oil. The benchmark April contract on Bursa Malaysia Derivatives ended 0.3% lower at 2,497 ringgit a metric ton after moving in a MYR2,490-MYR2,532 range.

Forecasts for improving weather in South America and expectations for a growing surplus of soy oil in the 2012-13 marketing year driven by large increases in soybean output from Brazil could keep prices of rival palm oil in check, TA Research said in a report. Both palm oil and soyoil compete for similar export destinations. World-wide soybean production is projected to increase by 13% on year to 269.5 million tons in the 2012-13 marketing year. "While Argentina is at risk of drought at this juncture the large increase in soybeans production from Brazil will be more than sufficient to offset any crop loss in Argentina," the research company said.

Expectations for strong palm-oil production in the absence of La Nina and El Nino conditions suggest stockpiles are likely to stay at more than 2 million tons in the next few months even though export demand has risen on the back of an export-tax advantage over Indonesia, a trading executive at a foreign brokerage said. The executive tipped prices around MYR2,400-MYR2,600/ton the next few weeks. Palm-oil shipments in the first 10 days of February from Malaysia rose 18% to 440,830 tons, cargo surveyor Intertek Agri Services said Saturday. Outbound sales for the same period rose 25% to 429,070 tons, another surveyor SGS (Malaysia) Bhd. said earlier.

Malaysia maintained no export duty on CPO exports while Indonesia raised January CPO export tax to 9% from 7.5%. In the cash market refined palm olein for February shipments is offered at $850/ton while cash CPO for prompt shipment is offered at MYR2,450/ton. Open interest on the BMD was 174,821 lots versus 175,403 lots Wednesday. One lot is equivalent to 25 tons.  A total of 20,263 lots of CPO were traded versus 18,873 lots Wednesday.           [Dow Jones Newswire]

Better South American weather would contribute to an expected bumper crop in Brazil, poised to overtake the United States as the No.1 soybean grower, adding pressure to the soybean market tracked by palm oil. January's palm oil end-stocks eased off record levels and fell to 2.58 million tonnes, according to industry regulator data, but the smaller-than-expected decline triggered some selling pressure in the market. "While good export news continues to come in, nervousness about the large South American crop (and its effect on prices), as well as the U.S. soybean market facing a seasonal slowdown are pressuring the futures market," said a trader with a local commodities brokerage in Malaysia.

Technical analysis showed palm oil is expected to drop further to 2,460 ringgit per tonne, as it has fallen below support at 2,510 ringgit, said Reuters market analyst Wang Tao. Cargo surveyor data showed Malaysia's exports of palm oil products rose as much as 25 percent in the first 10 days of February on stronger demand from major buyers India, China, the United States and Europe. Traders will be looking out for Feb. 1-15 export data on Friday to further gauge demand trend of the tropical oil.

Analysts say seasonally slowing production could see stockpiles in February easing another 4 percent on the month to 2.48 million tonnes, but inventory levels are unlikely to dip below the 2-million-tonne mark in the first quarter of 2013. "This should keep crude palm oil prices below 3,000 ringgit per tonne in the first quarter of 2013," said Kenanga Research analyst Alan Lim in Kuala Lumpur. India's vegetable oil imports soared 27.4 percent from a month earlier to hit an all-time high in January on record purchases of cheap palm oil from southeast Asia, a trade body said on Thursday, despite a hike in import duties mid-month.

Oil prices rose on Thursday as fresh tensions over Iran's nuclear programme revived global supply concerns, offsetting weaker-than-expected growth data from France and Germany. In competing vegetable oil markets, U.S. soyoil for March delivery dropped 0.3 percent in late Asian trade. The Dalian Commodity Exchange is closed for the Lunar New Year holidays and will resume trading on Monday.            [Reuters]

FEB 1-15 Palm Oil Export is up 18%, according to ITS.

Today's Support and Resistance for benchmark April contract is located around 2,498 and 2,537 respectively.