FCPO Related News (Wed, Jan 16)

KUALA LUMPUR, Jan 16 (Reuters) - Malaysian palm oil futures rose to a more than one-week high on Wednesday on investor optimism a zero-duty tax structure will spur exports from the world's No.2 producer and help boost global demand for the tropical oil. The positive sentiment was also buoyed by seasonally slowing production which could help curb stockpiles that hit a new record of 2.63 million tonnes in December.

The Malaysian government announced on Tuesday that it will retain its crude palm oil export tax at zero percent for February, in an effort to give a competitive edge over top producer and biggest rival Indonesia. "Indonesia's crude palm oil is now pricier than Malaysian crude palm oil. So Malaysian exports will definitely pick up," said a trader with a foreign commodities brokerage.  "Most traders are trading on the forward view. Even though exports are not looking so good now, but with the overall drop in production, we are expecting stocks to be lower in February or March," the trader added.

By the midday break, the benchmark April contract on the Bursa Malaysia Derivatives Exchange had climbed 0.8 percent to 2,433 ringgit ($806) per tonne. Prices earlier touched 2,441 ringgit, the highest level seen since Jan. 7. Total traded volume stood at 15,373 lots of 25 tonnes each, higher than the usual 12,500 lots. Technical analysis showed that Malaysian palm oil may test a resistance of 2,449 ringgit per tonne, a break above which will lead to a further gain to 2,522 ringgit, said Reuters market analyst Wang Tao.

Weaker winter demand from Europe and China had taken a toll on palm oil exports, causing shipments to fall more than 20 percent in the first 15 days of January. Palm oil tends to solidify in cold temperatures. But with warmer weather on its way, traders expect demand to pick up in the coming weeks ahead. "Moving forward, it can only improve -- it will not go worse. The weather is getting warmer and you will see more imports going into China," the trader added.

Brent crude rose towards $111 a barrel on Wednesday on hopes of a revival in demand growth in the world's top oil consuming nation after U.S. retail sales beat forecasts and oil inventories there rose far less than what was expected.  U.S. soyoil for March delivery was almost flat in early Asian trade. The most active May soybean oil contract on the Dalian Commodity Exchange edged up 0.1 percent.         [Reuters]

Crude palm-oil futures on Malaysia’s derivatives exchange ended up Tuesday because of gains in CBOT soyoil and short covering after several days of decline. Further gains remain limited on record stockpiles and lower exports. The benchmark March contract at Bursa Malaysia Derivatives ended 1.2% higher at 2,399 ringgit a metric ton after moving in a MYR2,382-MYR2,413 range.  CBOT March soyoil was last trading 0.1% higher at 50.52 cents/lb at 1027 GMT. "Investors covered shorts mainly on [CBOT] soy movements," a trading executive at a Kuala Lumpur-based brokerage said.

Market sentiment also got a small boost from Jan. 1-15 export estimates by cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. The export numbers fell by less than previously thought. Exports during the period fell 21% from the previous month to 570,510 tons, Intertek said, while SGS put the figure at 571,481 tons compared with an expected 24% fall to 550,000 tons. "Shipments to China remain weak but some are hoping for further improvements in the second half of January," a vegetable-oil exporter in Penang said. SGS and Intertek said Jan 1-15 exports to China fell 43% and 45% to 126,450 tons and 120,950 tons, respectively–a result of uncertainty over stricter quality-control rules for cooking-oil imports by No. 2 importer China. The rules came into effect Jan. 1. A visit by China’s food safety officials at the end of the month could shed some light, Malaysian officials said Monday. Open interest on the BMD was 173,608 lots, versus 177,332 lots Monday. One lot is equivalent to 25 tons. A total of 42,040 lots of CPO were traded versus 36,146 lots Monday.

Today’s Support and Resistance for benchmark April contract is located around 2,400 and 2,450 respectively.