FCPO Related News

Crude palm oil futures on Malaysia’s derivatives exchange ended little changed after moving both ways Tuesday, as investors digested vegoil price forecasts by prominent analysts. The benchmark January contract at Bursa Malaysia Derivatives ended MYR4 lower at 2,466 ringgits a metric ton after moving in a MYR2,443-MYR2,521 range. Palm oil has declined more than 20% since the beginning of the year and could fall further in the next few weeks due to rising palm oil supplies in Southeast Asia and favorable progress of the U.S. soybean crop.

Leading analyst Dorab Mistry said palm oil prices could fall to a three-year low of MYR2,200/ton in the next four to six weeks as import demand from major consumer China has slowed. Also, palm oil stockpiles in the world’s top CPO producer after Indonesia may exceed 3 million tons by Jan. 1, he said during an industry conference in Kuala Lumpur. For the year ahead, production of competing oilseeds, including sunflower oil, may remain weak and potentially steering buyers to palm oil to meet requirements. "Prospective decline in supplies of competing vegetable oils could help palm oil to recover toward MYR3,300/ton by March," Hamburg-based oilseed analyst Thomas Mielke said at the conference.

Palm oil's falling premium over petroleum prices could increase its appeal for use as biodiesel, leading vegoil analyst James Fry said Tuesday. Palm oil's premium over petroleum prices has fallen since July due to rising inventories of the tropical oil, which is used to make a wide variety of consumer products, he said. "When vegetable oil prices approach that of crude oil, the production of biodiesel and the direct burning of vegetable oils become [more economically] attractive," Mr. Fry, who's also chairman of agri-consultancy LMC International, told an industry briefing in the Malaysian capital. He didn't give a forecast on prices, but he predicted at a recent conference in Mumbai that palm oil prices on Malaysia's derivatives exchange would average 2,285 ringgit a ton in the October-December quarter.

[Dow Jones Newswire]

Malaysia may continue issuing a tax free crude palm oil quota to some firms next year, a senior industry source told Reuters on Monday. The source, who has direct knowledge of government policy making, said some plantation companies had asked the commodities ministry to make an exception so that firms with refineries overseas can maintain profit margins. Analysts say the government is likely to keep the export quota for planters that have refineries overseas and remove those licence holders who did not make use of their facility to prevent leakages in the system. "Potentially the government could keep the export quota for those who have refineries overseas. I think the government announced their plans early so they could gauge the reaction," said Ben Santoso, a plantations analyst with DBS Bank in Singapore.

[Reuters]

Today’s Support and Resistance for benchmark January contract is located around 2,450 and 2,500 respectively.