FCPO Related News (Wed, Jan 23)

Crude palm oil futures on Malaysia’s derivatives exchange ended higher Tuesday, reflecting investor concern about inclement weather in major soy- and oil-palm growing areas, South America and Malaysia, respectively.  The benchmark April contract at Bursa Malaysia Derivatives ended 1.9% higher at 2,465 ringgit a metric ton after moving in a MYR2,430-MYR2,474 range.

Concerns that dry weather in Argentina and Brazil could hurt soybean crops supported palm oil as both vegetable oils compete for similar export destinations. Malaysia, the world’s no. 2 palm oil producer, faces weather issues as well. Malaysia’s weather bureau said heavy rain is expected over the peninsular states of Pahang and Johor, which both account for about 30% of Malaysia’s palm oil production, raising concerns of a supply disruption. The two states produced 5.7 million tons of palm oil in 2012. Malaysia’s overall palm oil output last year was 18.79 million tons.

"Market sentiment improved somewhat following the Jan 1-20 export reports, as the fall [in shipments] was not as steep as Jan 1-15 numbers," a vegetable oil exporter in Pasir Gudang said. Cargo surveyor Intertek said Jan 1-20 exports fell 17% to 830,830 tons, compared with Jan 1-15 fall of 21% to 570,510 tons. Palm oil exporters said weather-related supply disruptions could prevent further stock builds in Malaysia, underpinning prices. They tip prices to rise toward MYR2,500/ton this week. Stockpiles at end-December rose to an all time high of 2.63 million tons, industry regulator the Malaysian Palm Oil Board said in a Jan. 10 report.

Open   interest   on   the   BMD   was  176,684   lots,  versus  176,691  lots  Monday. One  lot   is equivalent  to  25  tons.  A   total   of   35,955   lots   of   CPO   were  traded  versus  25,074  lots Monday.                   [Dow Jones Newswire]

Today’s Support and Resistance for benchmark April contract is located around 2,450 and 2,500 respectively.