FCPO Related News (Thurs, Apr 25)

[Malaysia April 1-25 Palm Oil Exports 1.12 Mln Tons, up 4.7% on Month – Intertek]

KUALA LUMPUR, April 24 (Reuters) - Malaysian palm oil futures rose on Wednesday as buying interest surged after  earlier losses, while hopes that near-stagnant output from the world's No.2 producer would help ease inventories also underpinned sentiment. But bleak economic data that stoked concerns about a slowdown in global demand for commodities kept a lid on gains. "There hasn't been any new developments in the market so it is drifting sideways these days. Overall there is pressure from the macro side -- energy markets are under pressure, and you have China and German data not looking too good," said a trader with foreign a commodities brokerage in Malaysia.

Growth in Chinese factories slowed to a crawl as export demand dwindled, according to HSBC's flash PMI readings, while Germany, the euro zone's largest economy, saw business activity slip for the first time in five months. "Things are friendly for palm itself," the trader added. "April's exports will likely be around 1.5 million tonnes. We are looking at a 2-3 percent rise in production, which would probably drop April's end-stocks to a 1.9 million tonne level." Stocks stood at 2.17 million tonnes in March. The benchmark July contract on the Bursa Malaysia Derivatives Exchange edged up 0.8 percent to close at 2,290 ringgit ($751) per tonne. It traded between 2,260 and 2,304 ringgit. Total traded volumes stood at 24,635 lots of 25 tonnes each, lower than the average 35,000 lots.

Poor economic data from China, palm's second largest buyer, may cap gains in crude palm oil prices, analysts said. "With the latest HSBC Purchasing Manager's Index for March worse than the median expectation, concerns have been  growing with regards to the sustainability of  Chinese growth," Phillip Futures said in a note on Wednesday. Cargo surveyor data for the first 20 days of April showed that China has imported less palm products from Malaysia compared with the same period last month. Export data for April 1-25 will be released on Thursday. But near-stagnant production should help offset lower export demand and ease inventory level to below the 2 million tonne mark.

In other markets, Brent crude rose above $101 a barrel, drawing support from strong equity markets, but gains were capped by the gloomy economic data. In other vegetable oil markets, U.S. soyoil for July delivery gained 0.3 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange slipped 1.3 percent.           [Reuters]

Palm oil has declined 4.4% so far this month owing to concerns about the health of China’s economy. "Ramadan buying will start in May so stockpiles may be drawn down during the May-June period to around 1.9 million-2 million tons" and will likely limit further price falls, a trading executive at a Singapore-based trading company says. Buyers usually commence purchases a few months before the holy month of Ramadan–which starts in July this year. Consumption of cooking oil rises during this period as Muslims break fasts with evening feasts.

Many said palm oil exports likely rose 2.3% on month to 1.09 million tons in that period, "so this has spurred some investors to add long positions," a trading executive at a Kuala Lumpur-based commodities brokerage says. "Palm oil’s near-term technical chart seems supportive of a rebound to MYR2,330/ton," says Chandran Sinnasamy, trading head at commodities brokerage LT International; however, he adds that prices may still be looking lower in the longer term due to concerns about the health of China’s economy, a major vegoil consumer.           [Dow Jones Newswire]

Today’s Support and Resistance for benchmark July contract is located around  2,280 and 2,328 respectively.