FCPO Related News (Wed, Apr 24)

SINGAPORE, April 23 (Reuters) - Malaysian palm oil futures inched up on Tuesday as a drop in prices to 4-month lows in the previous session attracted some buyers, although gains were limited by slowing export demand. A preliminary reading on Tuesday showed manufacturing growth in China slowed in April, further weighing on riskier assets such as shares and some commodities after disappointing economic data last week triggered a sharp market sell-off.

But traders said palm oil prices drew some support from bargain hunting after tumbling to a 4-month low the previous day on sluggish exports and bearish external factors. "We see some bargain hunting today, but overall sentiment is still volatile especially on the macroeconomic front. Support remains at 2,250 ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur. The benchmark July contract on the Bursa Malaysia Derivatives Exchange gained 0.8 percent to close at 2,272 ringgit ($743) per tonne.

Prices fell to 2,250 ringgit on Monday, a level not seen since Dec. 14. Total traded volumes stood at 35,888 lots of 25 tonnes each, slightly more than the average 35,000 lots seen so far this year. Technical analysis showed palm oil is expected to consolidate in a range of 2,249 to 2,289 ringgit for one trading session before resuming its downtrend, Reuters market analyst Wang Tao said.  Malaysian palm oil exports for April 1-20 fell 6.4 percent  to 864,206 tonnes from 922,987 tonnes shipped during March 1-20, cargo surveyor Societe Generale de Surveillance said.

Sluggish exports could prevent end-stocks from easing below  the psychological 2-million-tonne mark, putting more pressure on palm oil prices. Inventory level fell to 2.17 million tonnes in March, down 11 percent from February's 2.44 million tonnes. In other markets, Brent crude fell below $99 a barrel after weaker-than-expected manufacturing data from China and Germany darkened the outlook for fuel demand. The flash HSBC Purchasing Managers' Index fell to 50.5 in April from 51.6 the month before as new export orders shrank in China. The PMI's 50-point level demarcates growth from contraction from the month before. In other vegetable oil markets, U.S. soyoil for July delivery edged down 0.6 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange fell 1 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.           [Dow Jones Newswire]

Today’s Support and Resistance for benchmark July contract is located around 2,250 and 2,288 respectively.