FCPO Related News

KUALA LUMPUR–Crude palm oil futures on Malaysia’s derivatives exchange declined Tuesday, reflecting concerns about Europe’s debt crisis and rising palm oil inventories, market participants said. The benchmark January contract at Bursa Malaysia Derivatives ended 1.8% lower at 2,501 ringgit a ton after earlier tumbling 2.3% to MYR2,491/ton, the lowest since Oct 18.

Prices tracked weaker palm and soyoil futures on Dalian Commodity Exchange, and were weighed down by worries that lower CPO export taxes for November in Indonesia, the world’s biggest producer, could steer buyers away from Malaysia. End-October palm oil inventories in Malaysia are likely to hit a record around 2.55 million-2.60 million tons, capping palm oil’s upside in the near term around MYR2,600 a ton, a trading executive at a brokerage in Kuala Lumpur said.

"The only positive news is that stocks could’ve been higher, but firm exports this month helped" cap the increase, the executive said. Inventories hit an all-time high of 2.48 million tons at the end of September. Traders tip October exports at 1.62 million tons, compared with 1.43 million-1.44 million tons in September. Cargo surveyors SGS (Malaysia) Bhd. and Intertek Agri Services are scheduled to issue October shipment data Wednesday.      [Dow Jones Newswire]

Prices of the edible oil also came under pressure from weaker Brent crude as Sandy, one of the worst storms to hit the United States in years, shuttered U.S. refineries, curbing energy demand in the world's largest economy and weighing on other commodity markets. "The tax cut will hurt Malaysia's palm oil prices as Indonesia's palm oil becomes more competitive in the near future. Malaysian players will certainly hope that the government will do more to counter such an act from Indonesia."

Total traded volumes stood at 33,602 lots of 25 tonnes each, higher than the usual 25,000 lots. Brent crude hovered above $109 a barrel on Tuesday due to the storm, and analysts expect weaker crude oil to weigh on the whole commodities asset class. In other vegetable oil markets, U.S. soyoil for December delivery inched up 0.2 percent in early Asian trade. The most-active May 2013 soybean oil contract on the Dalian Commodity Exchange fell 0.3 percent.  

"At the moment, we don't see any supportive news for palm oil. Prices are likely to stay choppy in a range of 2,430 to 2,600 ringgit," said Phillip Futures analyst Ker Chung Yang in Singapore. Palm oil prices may still target 2,379 ringgit per tonne, as a rebound from the Oct. 3 low of 2,230 ringgit has been completed and a preceding downtrend has resumed, said Reuters market analyst Wang Tao. Today’s Support and Resistance for benchmark January contract is located around 2,475 and 2,510 respectively.     [Reuters]