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Malaysian stocks fell to a two-month low and a gauge of price swings climbed to an 11-month high on speculation the government will dissolve parliament after the Lunar New Year for an election. The FTSE Bursa Malaysia KLCI Index lost 0.9 percent to 1,618.87 at 11:59 a.m. local time, poised for its lowest close since Dec. 7. It was the worst performer among benchmark indexes in Asia today. The KLCI’s 50-day volatility rose to 8.95, the highest level since Feb. 23. Volumes were 28 percent above the 30-day average at this time of day. Telekom Malaysia Bhd. sank 3.3 percent, leading declines in the stock gauge.

Asian shares and the euro paused on Thursday, marking time ahead of a European Central Bank policy decision and remarks from ECB President Mario Draghi on prospects for the euro zone economy. Commodities fell broadly on Wednesday, retreating from gains posted in the previous session, as a rebounding dollar and increased supplies of some raw materials weighed on prices. Brent crude oil futures posted a modest rise on Wednesday on economic optimism, while U.S. crude prices slipped after data showed an unexpected rise in U.S. crude oil inventories.

The spot month contract  for Kuala Lumpur Index Futures opened lower this morning at 1,591.5 following speculation that the general election will be held after the Lunar New Year. Today’s Support and Resistance for February contract is located around 1,580 and 1,600 respectively.

FCPO Related News (Wed, Feb 6)

SINGAPORE, Feb 5 (Reuters) - Malaysian palm oil futures eased on Tuesday on profit-taking after four straight sessions of gains, but hopes of better-than-expected inventory and export data next week limited losses. Persistent concerns over dry weather in South America and its impact on the soy crop there also kept a floor under palm oil prices.

Lower soybean oil production could shift some demand to the cheaper palm oil, which in turn may help ease record stocks for the tropical oil. "We are revising our January inventory forecast to 2.57 million tonnes from 2.66 million tonnes as we believe that exports in the month may have turned out better than expected at a 7 percent decline as compared to our earlier estimate of an 11 percent decline," Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank, said in a note.  "Although we believe the overall data will be positive on prices, the upside should still be limited in view of the still high inventory level at way above 2 million tonnes."

January palm oil stocks data from the Malaysian Palm Oil Board is due on Feb. 13. Inventory levels in the world's No.2 producer hit an all-time high of 2.63 million tonnes in December. Traders are also eyeing Feb. 1-10 export data after a better-than-expected performance in January. By the close, the benchmark April contract on the Bursa Malaysia Derivatives Exchange had shed 0.7 percent to 2,549 ringgit ($826) per tonne, after adding almost 5 percent in the last four sessions. It rose to 2,592 ringgit the previous day, just slightly off a 3-month high touched on Thursday. Total traded volumes stood at 25,536 lots of 25 tonnes each, slightly higher than the average 25,000 tonnes. Technical analysis shows palm oil is expected to fall to 2,510 ringgit, Reuters market analyst Wang Tao said.

In other markets, oil edged higher above $115 a barrel on Tuesday as investor concerns faded about political risks in the euro zone, although ample supply could hinder its chances of extending a three-week rally. In competing vegetable oil markets, U.S. soyoil for March delivery eased 0.1 percent in late Asian trade, giving up some gains from the previous sessions. The most active September soybean oil contract on the Dalian Commodity Exchange also edged lower, coming off the previous day's three-month high.

Today’s Support and Resistance for benchmark April contract is located around 2,527 and 2,560 respectively.

FKLI Related News

Global equity markets and oil prices bounced back on Tuesday after data showed the vast U.S. services sector extended a three-year expansion in January, while business activity in the euro zone showed signs of recovery. Oil rebounded on Tuesday, with London's Brent crude nearing a five-month high on rosy U.S. and European data.

Kuala Lumpur Index Futures spot month contract opened higher this morning at 1,630 as Wall Street bounces back after sell-off. Today’s Support and Resistance for February contract is located around 1,604 and 1,634 respectively.

FCPO Related News (Tues, Feb 5)

Palm oil advanced for a fourth day, trading near a three-month high, on speculation that Malaysian stockpiles will drop from a record as shipments expand after the second-largest producer set a zero export tax. The contract for delivery in April gained as much as 1.4 percent to 2,592 ringgit ($835) a metric ton on the Malaysia Derivatives Exchange, before trading at 2,577 ringgit at 12:22 p.m. in Kuala Lumpur. Prices reached 2,593 ringgit on Jan. 31, the highest level for the most-active contract since Oct. 25.

Exports from Malaysia climbed 11 percent to 1.46 million tons in January from a year earlier, according to data from Intertek on Jan. 31. Malaysia has maintained the zero-tariff policy for a second month in February, while Indonesia, the biggest producer, raised taxes on crude exports to 9 percent from 7.5 percent. Palm oil has rallied 16 percent from the close on Dec. 13, the lowest settlement since November 2009.

Investors are “speculating exports are going to be higher this next one or two months,” Benny Lee, a market strategist at Jupiter Securities Sdn., said by phone in Kuala Lumpur. India and China, the biggest users, were expected to buy, he said. Lower production will also help to draw down inventories, which were estimated at 2.5 million to 2.6 million tons last month, with steeper falls seen in February and March, Sebastian Tobing, an analyst at UBS AG in Indonesia, wrote in a report dated Jan. 31. Inventories reached a record 2.63 million tons at the end of December, according to the Malaysian Palm Oil Board. Output is typically lowest in the first two months of the year.

Refined palm oil for delivery in September gained as much as 0.7 percent to 7,252 yuan ($1,164) a ton on the Dalian Commodity Exchange, the highest price for the most active contract since Oct. 26, before trading at 7,230 yuan at 11:30 a.m. Soybean oil for delivery in the same month rose 0.7 percent to 8,914 yuan a ton. Soybeans for March delivery climbed 0.6 percent to $14.83 a bushel on the Chicago Board of Trade, while soybean oil for March delivery gained 0.7 percent to 53.35 cents a pound.          [Bloomberg]

SINGAPORE, Feb 4 (Reuters) - Malaysian palm oil futures edged up on Monday and were set for a fourth straight session of gains, tracking higher soybeans and soybean oil on persistent concerns over dry weather in Argentina. U.S. soybeans were trading near a six-week high despite scattered showers in Argentina in recent weeks that have brought some relief to thirsty 2012/13 soybean crops, as many areas are still suffering parched conditions, the Argentine agriculture ministry said.

Lower soybean and soybean oil production could shift some demand to the cheaper palm oil, which in turn may help ease record stocks for the tropical oil. "It's the South American weather that is serving as the pull factor," said a dealer with a foreign commodities brokerage in Kuala Lumpur. "Locally, with a continuous wide discount in cash crude palm oil to futures, sentiment is still cautious as traders await the expected high stocks for January."

By the midday break, the benchmark April contract on the Bursa Malaysia Derivatives Exchange had edged up 0.7 percent to 2,575 ringgit ($831) per tonne. Prices hit a 3-month high at 2,593 ringgit on Thursday. Total traded volumes stood at 12,129 lots of 25 tonnes each, thinner than the usual 12,500 tonnes. Technical analysis shows palm oil is expected to keep rising to 2,639 ringgit, as it has cleared resistance at 2,567 ringgit per tonne, said Reuters market analyst Wang Tao.

Traders are shifting their focus to Malaysia's palm oil stocks for January, hoping that slowing production and better-than-expected exports will bring down record stocks of 2.63 million tonnes recorded for December. Malaysian palm exports in January fell 7 percent from a month ago, said cargo surveyor Intertek Testing Services, while another surveyor, Societe Generale de Surveillance, reported a 6.4 percent fall. That represented an improvement from the double-digit decline seen in the first 20 days of January, as worries eased over China's stricter regulation on edible oil imports after the first cargo from Malaysia was discharged.

Brent crude steadied above $116 per barrel on Monday, holding near a more than four-month high, as data from top consumers the United States and China reinforced a view that the global economy was headed for a modest uptick this year. Other vegetable oil markets also advanced on Argentine weather concerns. U.S. soyoil for March delivery gained 0.8 percent in early Asian trade. The most active September soybean oil contract on the Dalian Commodity Exchange edged up 1 percent near a 3-month high.           [Reuters]

Today’s Support and Resistance for benchmark April contract is located around 2,534 and 2,560 respectively.

FKLI Related News

Major stock markets fell on Monday and the euro tumbled from multi-month highs against the dollar and yen as political uncertainty in Spain and Italy revived worries that the steps taken to rein in the euro zone debt crisis could unravel. Oil future prices dropped alongside equities on Monday as traders took profits after three weeks of gains and after a rise of about 10 percent rise in oil prices since the beginning of December.

FKLI spot month contract opened slightly lower this morning as renewed worries about the euro zone crisis caused the U.S. market to pull back from recent gains. Today’s Support and Resistance for  February contract is located around 1,621 and 1,638 respectively.

FCPO Related News (Mon, Feb 4)

Crude palm oil futures on Malaysia’s derivatives exchange rose Thursday to their highest in nearly three months, buoyed by signs of improving export demand and weather-related issues in key soy-growing areas of Argentina, market participants said Thursday.

The benchmark April contract at Bursa Malaysia Derivatives ended 1.9% at 2,557 ringgit a metric ton, after rising as much as 3.3% to MYR2,593/ton, the highest since Oct 25. Palm oil prices is up 4.8% for the month, driven by worries about floods in parts of oil-palm growing regions in Malaysia and drier weather forecast in South America. Traders expect bumper soy harvests in South America in coming months to help replenish tight global soy supplies, but drier weather in Argentina have raised concerns about the crop, lifting prices and widening soy’s premium to the cheaper palm oil.

Both soyoil and palm oil compete for similar export destinations and a wide price gap of $300/ton are driving price-sensitive buyers to buy palm oil cargoes for domestic requirements. "Exports in the second half have improved tremendously compared with the first 15 days of January. So it is likely, palm oil exports could recover in the coming weeks and help to flush out excess stockpiles (from Malaysia) next month," a trading executive at a foreign brokerage firm in Kuala Lumpur said.

Cargo surveyor Intertek Agri Services said January exports fell 7% from a month earlier to 1.46 million tons while another surveyor SGS (Malaysia) Bhd., put shipments at 1.42 million tons, a decline of 6.4%. Open interest on the BMD was 213,363 lots, versus 172,963 lots Wednesday. One lot is equivalent to 25 tons. A total of 45,100 lots of CPO were traded versus 24,129 lots Wednesday.           [Dow Jone Newswire]

Today’s Support and Resistance for benchmark April contract is located around 2,548 and 2,600 respectively.         

FKLI  Related News

Major world stock markets climbed to their highest in nearly two years on Friday, helped by manufacturing and employment data indicating the global economic recovery is on track. Oil, copper and gold prices jumped on Friday as stocks on Wall Street hit five-year highs after U.S. jobs and manufacturing data pointed to an economy on the mend.          [Reuters]

FKLI spot month contract opened higher this morning at 1,629, following strong gains in U.S Stocks on Friday. Today’s Support and Resistance for February contract is located around 1,624 and 1,639 respectively.