FCPO Related News (Fri, Jan 18)

SINGAPORE, Jan 17 (Reuters) - Malaysian palm oil futures fell on Thursday after India imposed an import duty on crude palm oil imports, a move that could hurt demand and leave stocks near record highs. India, the world's biggest buyer of vegetable oils, has set a 2.5 percent import duty on crude edible oils to stem imports and protect domestic oilseed growers. Traders fear demand may take a further hit from the move after Malaysian exports suffered a 20 percent decline for the Jan. 1-15 period from a month ago. "The market reacted negatively to the import duty," said James Ratnam, a research analyst with TA Securities in Malaysia. "But we are mindful that the duty may be too small to really have an impact on crude palm oil demand."

The benchmark April contract on the Bursa Malaysia Derivatives Exchange lost 2.1 percent to close at 2,378 ringgit ($789) per tonne. Total traded volume surged to 45,433 lots of 25 tonnes each, compared with the usual 25,000 lots, as the news triggered a sell-off. Technical analysis showed that Malaysian palm oil may end its current rebound around resistance at 2,449 ringgit per tonne, retracing to 2,403 ringgit, said Reuters market analyst Wang Tao.

Malaysia, which neighbours top producer and rival Indonesia, has been struggling with record stocks since September due to tepid global economic conditions and the euro zone crisis, which have stifled demand and caused prices to tumble 23 percent in 2012. While end-stocks are expected to slowly shrink in the first quarter of the this year on the back of seasonally slowing production, sluggish exports could crimp any recovery in prices. "For December we have stocks at 2.63 million tonnes. My assumption is that we are not going to see a 3 million tonne stock level, but it all depends on how exports play out for the rest of the month," said Ker Chung Yang, an analyst with Phillip Futures in Singapore.

Brent futures steadied near $110 per barrel on Thursday after Islamist militants attacked an Algerian gas field and took Western hostages, although concerns about a weak global economic outlook and demand worries weighed. In other 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.          [Reuters]

Some traders said India’s tax imposition may not be completely negative for Malaysia. "The news is not entirely bearish for Malaysian CPO exporters," a trading executive at a Malaysia-based vegetable oil exporting firm said. "Indonesia has an existing tax of 7.5% on CPO shipments, while Malaysia’s rate is set at zero." Thus palm oil from Malaysia is still cheaper, he said. The world’s no. 2 producer Malaysia said in October it would cut export taxes on CPO from Jan. 1, in a bid to regain market share from Indonesia.

The export tax rate on CPO for January and February is set at zero, compared with Indonesia’s export duty of 7.5% on CPO in January. Both Indonesia and Malaysia account for around 85% of global palm oil exports. Palm oil could rebound from Thursday’s fall, as investors will likely square off riskier positions ahead of the weekend, a Kuala Lumpur-based broker said, tipping Friday’s trade in a MYR2,385-MYR2,450/ton range.

In the cash market, refined palm olein for January was offered at $800/ton while cash CPO for prompt shipment was offered at MYR2,230/ton. Open interest on the BMD was 179,036 lots, versus 175,844 lots Wednesday. One lot is equivalent to 25 tons. A total of 45,433 lots of CPO were traded versus 35,249 lots Wednesday.           [Dow Jones Newswire]

Today’s Support and Resistance for benchmark April contract is located around 2,360 and 2,410 respectively.