FCPO Related News

SINGAPORE, Oct 11 (Reuters) - Malaysian palm futures rose on Thursday to their highest in more than a week, as a government plan to cut an export tax on crude palm oil offset record stockpiles and weak exports, while traders took positions ahead of a key U.S. report on demand and supply. The benchmark December contract on the Bursa Malaysia Derivatives Exchange gained 2.7 percent to close at 2,523 ringgit ($822) per tonne, just off an earlier high of 2,525 ringgit, a level last seen on Oct. 1. Total traded volumes stood at 41,253 lots of 25 tonnes each, far higher than the usual 25,000 lots.

The USDA on Thursday forecast 2012-2013 U.S. soybean inventories at 130 million bushels versus a previous forecast of 134 million, leading to gains in CBOT soyoil. USDA projections for tighter soy supplies may boost BMD CPO futures at the start of trading, though prices will likely be rangebound ahead of a decision by the Malaysian government on a possible export tax cut on CPO.

Malaysia has approved a plan to slash export taxes from the current level of 23 percent per tonne and will discuss the size of the cut on Friday, a government source said. The move could boost Malaysia's crude exports and help ease stockpiles from a record of 2.48 million tonnes in September. "We believe that most of the negative news from the high inventory level has been priced in as crude palm oil prices are currently at a high discount of $350 per tonne against soybean oil," said Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank, in a note.

Palm oil stocks hit an all-time high in September, thanks to record production, but prices are heading for their first weekly gain after three weeks of losses, further suggesting the sharp rise in inventory may already have been factored in. "The worst may be over, with palm oil production starting on a seasonal downcycle, which should ease the high stockpile," Alvin Tai, an analyst with Malaysia's OSK Investment Bank, said in a research note. "We note that Q4 tends to be the best quarter for both the palm oil price and plantation stocks."

Mr. Tai also said that any joint attempt by Indonesia and Malaysia–which account for about 90% of the world’s palm oil production–to stabilize prices "will be effective, as the palm oil industry is essentially a duopoly between the two countries." Investors are also looking out for further details Friday from the Malaysian government on an export tax cut on crude palm oil from the current 23%. The plan could boost shipments of Malaysian CPO and help draw down stock levels.

In a bullish sign for palm oil, Brent crude oil headed on Thursday for its highest close in a month, lifted by escalating tension between Syria and Turkey, maintenance in the North Sea and a supply crunch in oil products. In other vegetable oil markets, U.S. soyoil for December delivery was up 1.4 percent. The most active January 2013 soybean oil contract on the Dalian Commodity Exchange closed 0.2 percent higher.

Technicals showed palm oil faces resistance at 2,503 ringgit per tonne, a break above which will open the way towards 2,588 ringgit, according to Reuters market analyst Wang Tao.