FCPO Related News

Benchmark December CPO opened lower this morning as some investors were still on the sidelines before the September palm oil crop report by MPOB, but started moving  up to reach the day’s high of  2,483 after MPOB data was revealed to be within expectations.  End-September palm oil stockpiles rose 5.8% from end-August to a record high of 2.48 million tons, within market expectations of 2.43 million-2.50 million tons. Malaysia's production of crude palm oil in September rose 20% from August to 2 million metric tons, the Malaysian Palm Oil Board said in a monthly report Wednesday.

Malaysia's Oct. 1-10 palm oil exports fell 8.7% from the same period a month earlier to 420,758 metric tons, cargo surveyor SGS (Malaysia) Bhd. said Wednesday. Malaysia exported 460,939 tons during the Sept. 1-10 period. Another surveyor, Intertek Agri Services, put Oct. 1-10 palm oil exports at 448,624 tons, a decline of 1% from the previous month. Investors are now looking toward another crop report by the U.S. Department of Agriculture Thursday.

Crude palm oil futures on Malaysia’s derivatives exchange ended up Tuesday, tracking gains in Chicago soyoil and as investors covered short positions after last week’s tumble. Palm oil plunged to a three-year low last week of MYR2,230 a metric ton, weighed by concern about contract renegotiations and cargo defaults at a time when global vegetable oil supplies are rising due to seasonally higher production in Southeast Asia and the fast pace of the harvest of the U.S. Midwest soy crop. The benchmark December contract at Bursa Malaysia Derivatives ended 3% higher at 2,438 ringgit a metric ton after moving in a MYR2,392-MYR2,455/ton range.

Market participants also adjusted positions to reduce risk ahead of the MPOB report and the monthly crop report by USDA. Palm oil prices will likely edge higher next year, as inventories could be drawn down when the peak production season in Southeast Asia tapers off, analysts at Nomura equity research said. "We don’t believe a significant amount of demand destruction for palm oil will take place," said analyst Tanuj Shori, who expects Chinese and Indian refiners to switch to palm oil due to a wide price gap between palm and soyoil.

In a bullish sign for palm oil, oil rose on Tuesday after two days of losses, with tensions in the Middle East and the risk of supply disruptions outweighing concerns about sluggish global demand. In other vegetable oil markets, U.S. soyoil for December delivery gained 1.3 percent in late Asian trade. CBOT December soyoil futures were last trading 1.5% higher at 51.64 cents a pound at 1053 GMT.

[Dow Jones Newswire]

Today’s Support and Resistance for Benchmark December is located around MYR2,425/ton and MYR2,480/ton.