FCPO Related News (Thurs, Jan 17)

Crude palm oil futures on Malaysia’s derivatives exchange ended higher Wednesday on speculative buying interest, amid gains in CBOT soy oil during Asian hours. But the rise in palm oil was limited as market sentiment is generally cautious due to uncertainty over exports to major importer China brought about by stricter quality control measures imposed Jan. 1, and despite Malaysia leaving its export tax at zero for February.

The new benchmark April contract at Bursa Malaysia Derivatives ended 0.6% higher at 2,430 ringgit a metric ton after moving in a range of MYR2,423 to MYR2,444. CBOT March soyoil was 0.2% higher at 50.98 cents a pound at the end of trade on the BMD.  "The zero export tax announcement lent some support to the market," said LT International head trader Chandran Sinnasamy. "But palm oil’s upside remains limited as there’s limited cargo inquiries from China while another major importer India is sitting on ample port stocks, after strong purchases in the last three months."

Palm oil is likely to ease toward MYR2,390/ton in the near term, Mr. Sinnasamy said. Indian palm oil purchases reached 628,618 tons in December, an increase of 44% from a year earlier, whereas refined palm purchases rose 28% to 137,475 tons after a dip in prices stoked demand, the Solvent Extractors Association of India said in a statement Tuesday. Cooking oil stocks at Indian ports totaled 1.46 million tons as of Jan. 1, it said. Top palm oil producing countries Indonesia and Malaysia have ample supplies as well. Malaysia, the world’s No. 2 producer, said last week stocks reached an all time high of 2.63 million tons at the end of December, though analysts and planters expect that figure to drop in the coming months as yields are seasonally lower.

In the cash market, refined palm olein for January was offered at $810/ton, and cash CPO for prompt shipment was offered at MYR2,250/ton. Open interest on the BMD was 175,844 lots, versus 173,608 lots Tuesday. One lot is equivalent to 25 tons. A total of 35,249 lots of CPO were traded versus 42,040 lots Tuesday.

Today’s Support and Resistance for benchmark April contract is located around 2,400 and 2,460 respectively.