FCPO Related News

Crude palm oil futures on Malaysia’s derivatives exchange fell Wednesday, pressured by rising palm supplies and renewed concerns over Europe’s debt problems. The benchmark December contract at Bursa Malaysia Derivatives ended 1.8% lower at 2,621 ringgit ($853.40) a metric ton after moving in a MYR2,603-MYR2,642 range. (Dow Jones Newswire)

Palm oil is being pressured by "uninspiring" export demand in September and rising Southeast Asian supplies and the rapid progression of U.S. harvests of corn and soybean, a vegetable oil exporter in Pasir Gudang, Malaysia said. "We need exports to go up substantially to draw down inventory levels in Malaysia." The U.S. corn and soybean harvests are moving at a fast pace for this time of the year. The U.S. Department of Agriculture on Monday said 22% of the country’s soybean crop had been harvested through Sunday, up 12 percentage points, from a week earlier.

Analysts said palm oil output in Malaysia, the world’s largest CPO producer after Indonesia, could reach its peak during the September-October period, potentially pushing end-October inventories to 2.4 million tons and to 3 million tons by Jan. 1. Palm oil stockpiles reached 2.12 million tons at end-August, a level not seen since last October. Palm oil could ease back to a two-year low of MYR2,577/ton reached Monday, as "speculative investors are still in the process of liquidating riskier positions," a commodities trader in Kuala Lumpur said.

Market outlook is split between bearish and bullish. CIMB Research expects a recovery in prices by year-end, to around MYR2,800-MYR3,000/ton as demand for palm oil is expected to pick up by then, tipping palm oil stockpiles in Malaysia to peak at 2.43 million tons in October. But less optimistic trading executives expect palm oil to pull back further amid renewed concern about Europe’s economic situation. Yesterday’s rebound is seen as merely a brief correction. “I don’t think the market has bottomed out and prices could fall below the two-year low mark of MYR2,577/ton in the near term," said Chandran Sinnasamy, trading head at Kuala Lumpur-based LT International. He tips medium-term support at MYR2,430/ton.

Technically, the current downtrend may continue as long as the immediate resistance for benchmark December around 2,700 level is not breached. OSK Research cautions that a close below MYR2,650/ton could mark the return of selling pressure in the market.  Today’s Support and Resistance is located around 2,550 and 2,694 respectively.

SINGAPORE, Sept 25 (Reuters) - China, the world's second largest edible oil buyer, will not seek more nearby shipments for palm oil despite sharp price declines recently as port stocks of edible oils remained high, traders said. "Stocks in Malaysia could still go higher in September and October, so although current price discount is attractive, the discount may still grow steeper," said a Shanghai-based trader. "It depends on the economy of China also. If the economy picks up, they may start to import a lot more," said a regional vegetable oil trader in Singapore. ($1 = 6.3093 Chinese yuan)