FCPO Related News (Wed, Jan 2, 2013)

SINGAPORE, Dec 31 (Reuters) - Malaysian palm oil futures fell on Monday, weighed by lower exports although losses were limited by expectations that heavy rains in the world's No.2 producer may disrupt production and bring down record high stocks. Palm oil notched its worst annual performance since the financial crisis in 2008, losing more than one-fifth thanks to high stocks and a sluggish global growth that has dented edible oil demand.

For the coming year, traders are watching the impact of Malaysia's zero export tax for crude palm oil in January and a stricter import rule for edible oil to be enforced by China, the world's second-largest edible oil buyer. "Malaysia's new export duty will be tested. There are more concerns on the tax structure because it is now an even playground for both countries (Malaysia and Indonesia)," said a dealer with a foreign commodities brokerage in Malaysia. "I foresee an even fiercer price competition." Malaysian cargoes are still likely to be cheaper as it set the January export tax rate at zero compared to Indonesia's 7.5 percent.  

On the last trading day of the year, the benchmark March contract on the Bursa Malaysia Derivatives Exchange lost 2.6 percent to close at 2,433 ringgit ($796) per tonne.  Prices hit an intraday high of 2,517 ringgit per tonne – a level last seen on Nov. 2, prompting some traders to book profits soon after. Total traded volumes stood at 43,399 lots of 25 tonnes each, much higher than the usual 25,000 lots as traders squared their positions. Concerns of heavy rains in Malaysia disrupting supply persisted after the weather office upgraded its warning on Monday from yellow to orange stage for key producing states such as Pahang and Johor.

Brent crude slipped toward $110 per barrel on Monday, on worries the United States may not reach a deal by Jan. 1 to prevent a fiscal crisis that could erode fuel demand.  In competing vegetable oil markets, U.S. soyoil for March delivery fell 0.6 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodity Exchange closed 0.4 percent lower.           [Reuters]

Palm oil ended the year 25% lower, weighed by rising palm oil stocks as sluggish global economic growth affected commodity demand.  Malaysian palm oil exports in December declined 5.7% from the previous month to 1.57 million tons, according to an estimate by cargo surveyor Intertek Agri Services. Another surveyor, SGS (Malaysia) Bhd., put the figure at 1.52 million tons, down 7.9% from November.

The weaker exports were driven mainly by a slump in shipments to major palm oil consumer China, a result of uncertainty over China’s new quality control measures that will come into effect Tuesday, Malaysian exporters said. China’s Inspection and Quarantine Bureau said it won’t accept imports of edible oils containing too much peroxide or stearic acid. "China is the biggest client of Malaysian palm oil, buying at least 300,000 tons each month. If refiners aren’t able to export refined oils to China, [palm oil] stocks could stay above 2.5 million tons the next few months," despite weather-related supply disruptions in parts of oil-palm growing regions in Malaysia, a vegetable oil refiner in the southern state of Johor said.           [Dow Jones Newswire]

Today's Support and Resistance for benchmark March contract is located around 2,420 and 2500 respectively.