FCPO Related News (Monday, Nov 19)

KUALA LUMPUR–Crude palm oil futures on Malaysia’s derivatives exchange ended lower Friday as a slight decline in palm oil exports and concerns about the U.S. "fiscal cliff" weighed on sentiment, market participants said. The benchmark February contract at Bursa Malaysia Derivatives ended 1.3% lower at 2,429 ringgit a ton after moving in a range of MYR2,416-MYR2,439/ton.

The market found the latest palm oil exports "a tad disappointing," a trading executive at a Kuala Lumpur-based brokerage said. Cargo surveyor Intertek Agri Services said exports in the first 15 days of November fell 0.1% from a month earlier to 769,087 tons. Market participants are also concerned about the U.S. fiscal cliff–a combination of spending cuts and tax hikes set to automatically take effect in January if Congress and President Barack Obama can’t reach a deal on taxes and spending. Mr. Obama and congressional leaders are due to begin negotiations later in the day.

Palm oil rose sharply Wednesday, reflecting expectations that a seasonal decline in yields during the December-March period will help reduce Malaysia’s palm oil inventories, which hit a record 2.51 million tons at the end of October. Some market participants expect the onset of Malaysia’s annual monsoon season to further curb supplies as heavy rain slows harvesting and disrupts transportation.

Export demand is expected to remain firm. "I expect palm oil shipments to be higher in November. The modest drop in shipments for November 1-15 period is probably due to the holiday-shortened week," a vegetable oil exporter in Pasir Gudang said, pegging November shipments at 1.65 million tons. Intertek and another surveyor, SGS (Malaysia) Bhd., put October shipments at 1.60 million and 1.57 million tons, respectively.           [Dow Jones Newswire]

Malaysian financial markets were closed on Tuesday and Thursday for the Hindu festival of Diwali and the Islamic New Year. "The market came down a bit as there was some profit-taking," a trader with a foreign commodities brokerage in Malaysia said, adding that prices seemed to be trading in a broad range of 2,300 to 2,500 ringgit. "Exports were also down and that could be another reason."

Exports of Malaysian palm oil products for Nov. 1 to 15 fell 0.1 percent to 769,087 tonnes from 769,534 tonnes for the Oct. 1-15 period, cargo surveyor Intertek Testing Services said on Friday. That came as a disappointment after exports rose as much as 22 percent for the Nov. 1-10 period from a month ago, although some traders traced the slowdown to a slew of holidays this week. Slowing exports may put pressure on Malaysia's record stocks, which hit 2.51 million tonnes in October, missing expectations for 2.67 million.

Market players are also closely monitoring a French proposal of a fourfold tax increase on palm oil in food, which stirred opposition from foodmakers and industry groups in top producers Indonesia and Malaysia.

Brent futures hovered around $108 a barrel on Friday, as uncertainties surrounding the global economic outlook weighed on prices, and a showdown between Israel and the Palestinians stoked worries about supply. In other vegetable oil markets, U.S. soyoil for December delivery fell 1 percent in late Asian trade. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange closed down 1.6 percent.

For the week, prices posted a gain of 4.9 percent, snapping two straight weeks of losses. Total traded volumes stood at 31,623 lots of 25 tonnes each, higher than the usual 25,000 lots. Palm oil faces a resistance at 2,447 ringgit per tonne, a break above which will lead to a further gain to 2,588 ringgit, Reuters market analyst Wang Tao said.           [Reuters]

Today’s  Support and Resistance for benchmark February contract is located around 2420 and 2500 respectively.