FCPO Related News (Wed, Nov28)

Crude palm oil futures on Malaysia’s derivatives exchange ended lower Tuesday, as investors liquidated positions ahead of an industry outlook conference by three leading analysts later in the week. Also weighing on prices of the tropical oil was a decline in energy prices, which reduces the appeal of palm oil for use as a feedstock in biodiesel. The benchmark February contract at Bursa Malaysia Derivatives ended 0.9% lower at 2,410 ringgit a metric ton after moving in a MYR2,401-MYR2,458 range.

"The market is anticipating bearish price outlooks from leading vegoil analyst Dorab Mistry and opted to book profits on Monday’s gain," a trading executive at a Kuala Lumpur-based commodities brokerage said, tipping palm oil to trade in a choppy MYR2,380-MYR2,480/ton range for the rest of the week. The executive also said weak export numbers by cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. raised expectations that palm oil stock levels in world no. 2 palm oil producer Malaysia could hit another record in November from 2.51 million tons in October.

Intertek said Malaysia exported around 1.28 million tons of palm oil during the Nov. 1-25 period, down 1.8% from a month earlier. SGS put the figure at 1.26 million tons, down 1.9% from the same period in October. Palm oil prices have tumbled 25% this year as demand faltered amid slowdowns in China and Europe’s economies, raising Malaysian palm oil stockpiles to an all-time high of 2.51 million tons in October.

However, the battered prices are likely to attract major buyers China and India, Sime Darby Bhd’s president and group chief executive Mohd. Bakke Salleh said at the company’s earnings briefing. "We are optimistic that palm oil prices could go higher in the coming months, as we anticipate a pickup in demand when production is seasonally lower," he added. He expects prices to trade between MYR2,500 and MYR3,000/ton in the next six months.

Cash CPO for prompt shipment was offered at MYR2,200/ton. Open interest on the BMD was 171,916 lots versus 162,356 lots Monday. One lot is equivalent to 25 tons. A total of 35,938 lots of CPO were traded versus 30,722 lots Monday.

SINGAPORE, Nov 27 (Reuters) - Malaysian palm oil futures edged down on Tuesday, as traders booked profits from a near one-week high after Greece's international lenders agreed on a financial aid deal that boosted market optimism. On the domestic front, investors are watching Malaysian palm oil output to gauge whether stocks will reach another record high, especially after the latest cargo surveyor data pointed to weaker export demand. "Demand is tepid, with rumours that India may import on domestic shortfall.

Speculators are also seen pushing up futures amid optimism that output in the fourth quarter will avert the looming 'supply cliff'," said a trader with a local commodities brokerage in Malaysia. The benchmark February contract on the Bursa Malaysia Derivatives Exchange fell 0.9 percent to close at 2,410 ringgit ($792) per tonne, but off the day's high of 2,458 ringgit, a level last seen on Nov. 21. Total traded volumes stood at 35,938 lots of 25 tonnes each, higher than the usual 25,000 lots.  

The market, however, expects weaker palm oil prices to stimulate demand for price-sensitive markets such as India and Pakistan in the next few weeks. Palm oil stocks in China could hit one million tonnes by year-end, up from 790,000 tonnes last week, fed by surging imports and stagnant domestic demand, the China National Grain and Oils Information Centre said on its website

Brent crude stayed above $111 per barrel on Tuesday as optimism coursed through financial markets after Greece's international lenders reached a deal on a new debt target, although worries about a looming U.S. fiscal crisis kept a lid on gains. In other vegetable oil markets, U.S. soyoil for December delivery inched up 0.3 percent in late Asian trade. The most-active May 2013 soybean oil contract on the Dalian.

Technicals showed palm oil would revisit its Nov. 20 high of 2,485 per tonne based on a wave analysis, said Reuters market analyst Wang Tao. Today's Support and Resistance for benchmark February contract is located around 2,380 and 2434 respectively.