FCPO Related News (Wed, Dec 12)

Crude palm-oil futures on Malaysia’s derivatives exchange ended lower Tuesday because of ample palm-oil stocks. Investors are reluctant to place aggressive bets ahead of a crop report by the U.S. Department of Agriculture due later in the day.

The benchmark February contract at Bursa Malaysia Derivatives ended 0.9% lower at 2,292 ringgit a metric ton after moving in a MYR2,283-MYR2,324 range. Palm oil is unlikely to rise higher, analysts said, because stocks rose to a record 2.56 million metric tons at the end of November, according to a Dec. 10 report by industry regulator the Malaysian Palm Oil Board. Any price upside is likely to be capped, "until palm-oil stocks fall to around 2 million tons," CIMB Research said in a note.

December stockpiles could ease toward 2.54 million tons, as a seasonal fall in production may outpace export demand, CIMB Research said. "We expect output to fall 10% from the previous month to December, while export demand will probably drop only 2% as the attractive [CPO] price and China’s new regulation on quality may prompt consumers to restock," it added. Malaysia vegetable-oils exporters are expected to move more palm oil before a tax-free export quota expires at the end of the year.

Open interest on the BMD was 156,441 lots, versus 153,392 lots Monday. One lot is equivalent to 25 tons. A total of 38,386 lots of CPO were traded versus 35,330 lots Monday.          [Dow Jones Newswire]

Malaysian palm oil futures ended lower on Tuesday, as traders priced in record stocks in the world's second-largest producer of the edible oil. Malaysia's palm oil inventory level climbed for the fourth straight month to a record 2.56 million tonnes in November, weighing on futures that were headed for the worst annual performance since the 2008 financial crisis.

"We view the latest inventory data negatively as high stocks should keep crude palm oil prices at distressed levels of below 2,500 ringgit per tonne for an extended period well into 2013," Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank, said in a note to clients. On the weather front, an absence of El Nino disrupting production could lead to even higher palm oil supplies and pile more pressure on record high stocks, while the latest export data also failed to lift investor sentiment.

Malaysian exports fell 2.8 percent for the first 10 days of December from a month ago, said cargo surveyor Intertek Testing Services. Another cargo surveyor, Societe Generale de Surveillance, reported a 0.4 percent rise for the same period. But traders are hoping for higher shipments in the next few weeks as planters rush to finish their annual tax-free export quota that expires the end of December and as Chinese buyers stock up before the implementation of a stricter quality requirement on edible oil from next year.

In a bullish sign for palm oil, Brent crude oil rose to around $108 a barrel on Tuesday as a slightly weaker dollar and Middle East unrest supported prices, but stalled fiscal talks in the United States capped gains. In other vegetable oil markets, U.S. soyoil for January delivery fell 0.3 percent in late Asian trade. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange closed 0.1 percent lower.          [Reuters]

Today's Support and Resistance for benchmark February contract is loacted is around 2,240 and 2,310 respectively.