FCPO Related News

After hitting a three-year low in early trade, crude palm oil futures on Malaysia’s derivatives exchange reversed direction Monday, rallying to close higher after the release of data showing that inventories rose less than expected in October. The benchmark January contract at Bursa Malaysia Derivatives ended 0.3% higher at 2,324 ringgit a metric ton after tumbling more than 4% to MYR2,220/ton in the first 10 minutes of trade. It was only the second gain in the past seven sessions.

The market rallied after the Malaysian Palm Oil Board reported that end-October inventories totaled only 2.51 million tons–a record high but well below market expectations of 2.70 million-2.82 million tons. Short-covering in the afternoon session helped fuel the rally. Malaysia’s production of palm oil in October fell 3.3% from the previous month to 1.94 million tons, while exports reached 1.76 million tons, an increase of 16% from the previous month, the MPOB said.

"From the latest MPOB data, we can conclude that Malaysian stocks aren’t likely to hit 3 million tons in early January," said S. Paramalingam, executive director at Kuala Lumpur-based brokerage Pelindung Bestari. Mr. Paramalingam was referring to a forecast by analyst Dorab Mistry, who last week reiterated that stockpiles could surpass 3 million tons by Jan. 1. "Toward the end of December, stocks in Malaysia could hover around 2.2 million tons. We think that the inclement weather will have an impact on output, seeing as the monsoon has already affected palm oil areas in the northern region of peninsular Malaysia," Mr. Paramalingam said.           

Malaysia exported 514,798 metric tons of palm oil in the first 10 days of November, a rise of 22% from the previous month, cargo surveyor SGS (Malaysia) Bhd. said Monday. Malaysia exported 420,758 tons during the Oct. 1-10 period. The figure is lower than market expectations of 518,000 tons. Another surveyor, Intertek Agri Services, Saturday put Nov. 1-10 palm oil exports at 518,688 tons, an increase of 16% from the previous month.           [Dow Jones Newswire]

Exports increase is driven by demand from China and other Asian consumers restocking ahead of the Lunar New Year holidays in February 2013. U.S.soybean futures rebounded from a 4-1/2-month low on Tuesday as bargain buying snapped a four-session slide that nearly erased gains from this summer's crippling drought. Brent crude oil fell for a second day on Tuesday over concerns about lower demand in a well-supplied market and as the United States and Europe grappled with fragile economies.      

Technicals showed palm oil was expected to keep rebounding to 2,453 ringgit, said Reuters market analyst Wang Tao, based on a wave analysis.      [Reuters]

Today’s Support and Resistance for benchmark January contract is located around 2,300 and 2,370 respectively.