FCPO Related News (Wed, Dec 19)

Crude palm oil futures on Malaysia’s derivatives exchange ended lower Tuesday as weak export data and uncertainty over the U.S. fiscal cliff weighed on market sentiment. The benchmark March contract at Bursa Malaysia Derivatives ended 0.3% lower at 2,342 ringgit a metric ton after trading in a tight MYR2,332-MYR2,355/ton range.

Cargo surveyor SGS (Malaysia) Bhd. on Monday put Dec. 1-15 palm oil exports at 734,571 tons, a decline of 3.3% from the same period a month earlier. Sentiment also remained cautious as investors focused on the impending U.S. fiscal cliff as the country’s Republicans and Democrats continue to negotiate on the nature of spending cuts and tax hikes expected to take effect in January. However, the losses were tempered by Malaysia’s new CPO export tax structure, market participants said.

Malaysia on Monday set its export tax on crude palm oil for January at zero percent for CPO market prices of less than MYR2,250/ton, free on board. The move will help boost shipments from the world’s second-largest palm oil producer, reducing palm oil inventories, a Kuala Lumpur-based trader said. December palm oil inventories will likely be steady to slightly lower than the record 2.56 million tons seen at the end of November as demand from China picks up, he said.

Palm oil prices will also likely be supported by fears of tightening vegetable oil markets, another Kuala Lumpur-based trader said.  Recent rainfall in Argentina, the world’s third-largest soybean producer after the U.S. and Brazil, could further slow down crop plantings in some parts, he said, tipping soyoil on the Chicago Board of Trade to edge higher toward the 51.30-cents-a-pound mark in the coming sessions. Investors are also awaiting an announcement by Indonesia in the coming days on its CPO export tax structure for January.

Open interest on the BMD was 183,945 lots versus 186,314 lots Monday. One lot is equivalent to 25 tons. A total of 30,911 lots of CPO were traded versus 30,886 lots Monday.            [Dow Jones Newswire]

Palm oil futures have shed more than a quarter of their value since the start of the year, set for their biggest annual drop since 2008, although analysts say prices should recover in 2013 as stocks begin to ease. "For next year, we see a rebound in crude palm oil prices back to 2,750 ringgit per tonne from the current weak position,with signs only expected to start kicking in when inventories are back to optimal levels," Malaysia's Public Investment Bank

said in a research note.

   

"Although production levels are back to normal, demand from the major consuming countries remains uncertain due to the slowdown in economic activity and tightening measures on imports of vegetable oils." China, the world's second largest edible oil buyer, will impose stricter quality measures on edible oil imports from Jan 1 onwards.

In a bullish sign for palm oil, Brent crude rose above $108 a barrel on Tuesday as the outlook for demand improved on signs of progress in U.S. talks to resolve a budget crisis that threatens to dip the world's top oil consumer into recession again. In other vegetable oil markets, U.S. soyoil for January

delivery was almost flat in late Asian trade. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange edged up 0.1 percent.     

Technical analysis showed palm oil faces resistance at 2,381 ringgit per tonne, and may revisit 2,285 ringgit, a high touched on Dec. 14, said Reuters market analyst Wang Tao.              [Reuters]

Today's Support and Resistance for benchmark March contract is located around 2,300 and 2,350 respectively.