FCPO Related News

Crude palm oil futures on Malaysia’s derivatives exchange fell for a fifth-consecutive session Tuesday, hitting the lowest level in three years, reflecting tepid demand and rising supplies. The benchmark December contract at Bursa Malaysia Derivatives ended 8.5% lower at 2,255 ringgit a metric ton after tumbling as much as 8.7% to MYR2,250/ton, the lowest since November 2009.

Rising supplies of the commodity weighed on prices, trade participants said. "We are talking about September production rising 20%-30% on month, surging inventories. It is very much a bear market for now, so people are just selling," a senior trading executive at a Kuala Lumpur-based foreign brokerage said. He tipped palm oil to extend declines toward MYR2,200/ton.

Trading executives said end-September palm oil stockpiles might have risen to 2.25 million-2.3 million tons due to a seasonal surge in production. September shipments of palm oil from Malaysia, the world’s biggest producer after Indonesia, were little-changed from August. Cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. pegged outbound sales at 1.43 million-1.44 million tons.

Meanwhile, palm oil importers in India are seeking to renegotiate contracts after prices plunged to their lowest levels in almost three years, two trading executives said Tuesday. Over the past seven months, palm oil prices had risen 12% before falling by almost one-third this week, triggering cancelled deals. Since last week, buyers that process palm oil into a wide variety of consumer products have walked away from previously signed agreements after prices turned against them.

Any defaults by importers may add to palm oil inventories in Indonesia and Malaysia, the world’s top producers, and weigh on prices further. Malaysia’s palm oil stockpiles totaled 2.12 million metric tons at the end of August, the highest level since last October. The two trading executives estimate that as much as 200,000 tons of the tropical oil are being renegotiated. "There is also talk that buyers from India may default on earlier agreements," a Singapore-based trading executive said. "Palm oil prices plunged yesterday amid concerns that Chinese buyers may do the same–renege on contracts when they come back from the long holidays."

Crude palm oil futures on Malaysia’s derivatives exchange fell for a fourth-consecutive session Monday, hitting the lowest level in 15 months due to market concern about weak manufacturing activity in China and rising vegetable oil supplies. The benchmark December contract at Bursa Malaysia Derivatives fell 3.2% to 2,464 ringgit a metric ton after falling as much as 3.8% to MYR2,449/ton, the lowest since July 2010.

Manufacturing activity in China, a major vegetable oil consumer, contracted in September for a second-straight month, the official manufacturing Purchasing Managers Index showed Monday, raising concerns that the nation’s palm oil demand could decline. "Speculative selling along with seasonal pressure on prices amid the peak CPO production period in Southeast Asia weighed on the market today," a commodities trader in Singapore said. "Selling was exacerbated by the September export numbers, as many expected shipments to be significantly higher."

Cargo surveyor Intertek Agri Services said September exports fell 0.7% to 1.44 million tons, due to reduced shipments to Europe and the Indian subcontinent. Another surveyor, SGS (Malaysia) Bhd., said September exports reached 1.43 million tons, a 0.5% rise from its estimate for August. Any rally in palm oil prices is likely to meet strong resistance around MYR2,500-MYR2,550 a ton, a technical analyst in Kuala Lumpur said.  

(Dow Jones Newswire)