FCPO Related News (Tues, Dec 4) 

Crude palm oil futures on Malaysia’s derivatives exchange ended lower Monday on technicals-driven selling pressure and ample palm oil supplies although declines were limited by positive Chinese manufacturing data. The benchmark February contract at Bursa Malaysia Derivatives ended 2.3% lower at 2,316 ringgit a metric ton after moving in a MYR2,314-MYR2,405 range.

China’s official Purchasing Managers Index rose to a seven-month high of 50.6 in November, above a 50-mark that indicates an expansion in manufacturing activity. The data from China, a major vegetable oil consumer, helped to underpin the palm oil market. "Tanks are filled to the brim with [palm] oil. Even though exports are up in November, month-end stocks probably reached another record and that is why some investors are positioning themselves ahead of the official crop report due next Monday," a trading executive in Kuala Lumpur said.

End-October palm oil stocks from Malaysia, the world’s no. 2 producer, rose to an all-time high of 2.51 million tons, according to data by the Malaysian Palm Oil Board. Analysts and market participants said November stocks could hit another high at 2.60 million tons. Open interest on the BMD was 173,572 lots, versus 162,347 lots Friday. One lot is equivalent to 25 tons. A total of 30,926 lots of CPO were traded versus 20,776 lots Friday.           [Dow Jones Newswire]

Malaysian palm oil futures tumbled to a three-week low on Monday as investors booked profits on expectations of record stocks last month and after strong Chinese economic data lifted markets. U.S. soybean futures hit a three-week high on Monday as adverse weather threatened production in Argentina and southern Brazil, two of the world's top suppliers, but prices later slipped on spillover pressure from sinking corn and wheat prices.

Brent oil prices turned lower on Monday after data showed U.S. manufacturing activity slowed to a three-year low, offsetting more optimistic figures from China. Global shares and crude oil pared early gains to trade mostly lower on Monday after U.S. manufacturing activity hit a three-year low in November, offsetting signs of revived growth in China. Oil and metals futures mostly rose on Monday as stronger growth in China and positive U.S. factory data helped markets override concerns about the U.S. "fiscal cliff" that had dampened sentiment for weeks.     

Palm oil is expected to end its current rebound, based on a presumption that the fall from the Nov. 20 high of 2,485 ringgit has not been completed, said Reuters market analyst Wang Tao. Traders said investors were trying to bring the market down to 2,300 ringgit, after which there was likely to be rebound.

Other global financial markets were still up on a clutch of factory surveys on China showing evidence of an economic revival after seven quarters of slowing growth that signals stronger commodity demand from the world's second largest economy. China's encouraging revival supported Brent crude, which held around $111 per barrel on Monday, although gains were limited by concern about the economic welfare of the United States, the world's top oil consumer.

Stronger buying from Europe and India lifted Malaysian palm oil exports in November compared to a month ago, according to data from cargo surveyors. Based on this, some traders are holding out for signs of higher demand, coupled with seasonally weaker palm oil output in Malaysia that could limit the growth of this Southeast Asian country's stocks. Production tends to slow down in the year-end as heavy rains can trigger floods that disrupt harvesting and complicate logistics. "Previously we were talking about Dec-Jan stocks hitting 3 million tonnes, but I don't think that will materialize," said another trader. "Instead of going up, stocks could drop down by at least 50,000 tonnes because of demand from Europe and China".

In palm oil's competing markets, U.S. soyoil for December delivery rose 0.8 percent. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange climbed 1.4 percent in late Asian trade. In a sign of festival demand, Chinese soy buyers have stepped up orders from the United States in recent days, keen to purchase cargoes for delivery in the first quarter of next year, traders said last week. China celebrates a one-week Lunar New Year holiday in February.           [Reuters]

Today’s Support and Resistance for benchmark February contract is located around 2,288 and 2,341 respectively.