Thursday, 7 March 2013

FCPO Related News (Fri, Mar 8)

Crude palm oil futures on Malaysia’s derivatives exchange ended 
higher Thursday, as stockpiles in Malaysia likely eased amid a seasonal drop in production, spurring investors to cover short positions. The benchmark May contract at Bursa Malaysia Derivatives ended 1.4% higher at 2,433 ringgit a metric ton after moving in a MYR2,384-MYR2,442/ton range.

Palm oil production tends to bottom out during the February-March period and could mean further declines in stockpiles over the next few months, a commodities broker at a foreign brokerage said. Output of the tropical oil, used to make a wide variety of consumer products ranging from chocolates to lipsticks, generally dips during the November-March period before yields improve in the second half of the year. Palm oil’s improving appeal as feedstock for biodiesel, brought on by CPO’s discount to Brent crude oil, provided the catalyst for gains during afternoon trade.

Improving shipments for CPO in the coming months will likely stem from the energy and transportation sectors, Ong Chee Ting, analyst at Maybank Investment Bank, said in a report. He also noted that Malaysia’s move to revamp its export tax policy on CPO "is key to restoring Malaysia’s export competitiveness this year" and expects palm oil to strengthen in the first half of 2013. Malaysia, the world’s no. 2 palm oil producer, said last October that it would slash export taxes on the crude grade from 23% to between zero and 8.5% to ease inventories. The tax rate for this month is set at 4.5%.

In the cash market, refined palm olein for March shipment was offered at $820/ton, while cash CPO for prompt shipment was offered at MYR2,420/ton. Open interest on the BMD was 167,050 lots, versus 186,531 lots Wednesday. One lot is equivalent to 25 tons. A total of 28,800 lots of CPO were traded versus 20,945 lots Wednesday.         [Dow Jones Newswire]

Today’s Support  and Resistance for benchmark May contract is located around 2,400 and 2,460 respectively. 

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