FCPO Related News

Crude palm oil futures on Malaysia’s derivatives exchange ended lower Thursday, mirroring declines in regional equities amid concerns over U.S. and euro-zone economies. The benchmark January contract at Bursa Malaysia Derivatives settled 2.5% lower at 2,336 ringgit a metric ton, its lowest settlement since Oct. 4.

Investors are now shifting focus from the result of the U.S. election to whether or not the President Barack Obama and Congress will work out a deal to avert the "fiscal cliff" of spending cuts and tax increases that the U.S. faces on Jan. 1. A gloomy European Commission outlook for the region’s economy is also weighing on sentiment, as are fundamentals for the tropical oil, as palm oil supplies are on the rise, with vegetable oil analyst Dorab Mistry issuing a bearish outlook, saying palm oil needs to fall to MYR2,200/ton for two months to stimulate demand that will help draw down inventories.

Mr. Mistry reiterated a forecast that palm oil stocks could reach or surpass 3 million tons by early January. Inventories in Malaysia rose to a record of 2.48 millions in September. Stockpiles are widely tipped to have hit another record in October, around 2.70 million-2.82 million tons, as production continued to outpace export demand. Still, planters with estates in peninsular Malaysia say they are optimistic that prices won’t dip to MYR2,200/ton, as year-end monsoons and floods could slow harvesting and disrupt transportation of the oil palm fruits to mills and refineries, curbing supplies.
Malaysia’s Meteorological Department has issued an advisory for heavy rain and flooding in some Malaysian provinces, including Johor–a major palm oil-producing region in the south. "Any flood issues in this [Southeast Asian] region will underpin prices," a planter at a Kuala Lumpur-based major plantation company said. Open interest on the BMD was 170,567 lots versus 134,091 lots Wednesday. One lot is equivalent to 25 tons. A total of 37,323 lots of CPO were traded versus 43,064 lots Wednesday.

Benchmark  January ended sharply lower yesterday after having breached  immediate Support level at 2,360 and Traders can expect more downside potential on the benchmark Jan once the major Support  level of 2,337 has been broken. Today’s Support and Resistance for Janauary contract is located around 2,320 and 2,400 respectively.  Traders may reduce their position ahead of the weekend as Bursa Derivative will be closed on next Tuesday for Deepavali and Thursday for Awal Muharam public holiday.