FCPO Related News

SINGAPORE, Oct 5 (Reuters) - Malaysian palm oil futures gained on Friday as steep losses earlier in the week continued to lure buyers back into the market.  According to a dealer with a foreign commodities brokerage in Malaysia, this rebound is very much within anticipation as selling has been exhausted. "There's definitely short covering ahead of the weekend", he added.  By the midday break, the benchmark December contract on the Bursa Malaysia Derivatives Exchange surged 4.1 percent to 2,448 ringgit ($803) per tonne, after trading in a range of 2,385-2,448 ringgit. Total traded volumes stood at 15,039 lots of 25 tonnes each, higher than the usual 12,500 lots.

There was also some positioning ahead of a government decision on a proposal to cut palm oil export taxes. Traders are awaiting a possible decision by the Malaysian cabinet on a proposal to cut crude palm oil export taxes to 8-10 percent from a current 23 percent in a bid to counter competition from top producer Indonesia. But prices are on still on track for a weekly drop of almost 4 percent, their third straight weekly decline. Palm oil shed more than 11 percent in the first two days of the week, tumbling to a near 3-year low at 2,230 ringgit per tonne on Wednesday, before paring losses later in the week.

After a steep decline in prices in recent weeks, analysts are calling for a recovery by the end of the year. "In our view, crude palm oil (CPO) prices are due for a significant upward correction, to 3,250 ringgit by end Q4 from current levels near 2,350 ringgit, after an excessive decline in September and October," said Standard Chartered analyst Abah Ofon in a research note. The recovery will be driven by a drop in Malaysian production and Indonesian inventories in Q4 as well as supportive external markets and bullish CPO price seasonality, the note added.

In a bearish sign for palm oil, Brent futures slipped below $112 per barrel on Friday, but they are on course to end a choppy week nearly flat as rising tensions in the Middle East battle with perennial worries about the global economy and oil demand. In other vegetable oils markets, U.S. soyoil for December delivery gained 0.3 percent in Asian trade. The Dalian Commodity Exchange is closed for a week-long holiday in China and will resume trading on Oct. 8.

Soybean futures rose Thursday due to better-than-expected weekly export sales report from the U.S. Department of Agriculture and based on positive technical signals which indicated sharply oversold conditions. The USDA reported net export sales of 1.3 million metric tons in the week ended Sept. 27, with China accounting for much of the volume. The sales were above traders' expectations for sales in a range of 700,000 to 900,000 tons, according to a Dow Jones Newswires poll.

Technicals showed palm oil would rebound more to 2,503 ringgit as it has cleared a resistance at 2,399 ringgit, said Reuters market analyst Wang Tao.