FCPO Related News (Thurs, Nov 22)

Crude palm oil futures on Malaysia’s derivatives exchange ended lower Wednesday, reflecting investor concerns over disappointing exports at a time of ample stocks in Malaysia. The benchmark February contract on Bursa Malaysia Derivatives ended 0.6% lower at 2,443 ringgits a metric ton, after moving in a MYR2,427-MYR2,460/ton.

Lower export numbers by cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. for the Nov. 1-20 period raised concerns that stocks are going to be much higher from October’s record high of 2.51 million tons, as crude palm oil production in the key growing state of Sabah remains strong. "Production has been quite good and I expect we will continue to see strong numbers even in December," a company executive at a major plantation firm in Sabah said.

Firm production in Sabah and expectations for demand to remain tepid for the rest of November could push end-November stocks to 2.65 million-2.70 million tons, potentially dragging prices lower in the coming weeks, a trading executive at a Kuala Lumpur-based bank said. Still, not all are bearish on the palm oil market. "Palm oil prices have dipped to a level that is low enough to encourage demand," Pawan Kumar, associate director at Food and Agribusiness Advisory unit at Rabobank International, said. Mr. Kumar also said poor prospects for global sunflower seed production in the upcoming season could steer consumer demand toward palm oil. He tipped palm oil to recover to MYR2,800/ton by the first quarter of 2013 and to MYR3,000/ton in the second quarter.

Today’s Support and Resistance for benchmark February contract is located around 2400 and 2470 respectively.