FCPO Related News (Wed, Jan 30)

Crude palm oil futures on Malaysia’s derivatives exchange ended higher Tuesday on the back of hopes that shipments from Malaysia will rise as top producer Indonesia has decided to raise its CPO export tax for February. However, gains were limited by expectations that stockpiles in Malaysia will surge to another record high end-January, market participants said. The benchmark April contract on Bursa Malaysia Derivatives ended 1.2% higher at 2,476 ringgits a metric ton, after trading in a MYR2,446-MYR2,484/ton range.

Indonesia said Monday that it will increase the CPO export tax to 9% next month from 7.5% now, while Malaysia said it will keep its February CPO export duty unchanged at zero. "The tax hike will likely boost shipments from Malaysia next month. However, many are still worried about stocks hitting another high at the end of the month," a trading executive at a foreign commodities brokerage said.

Production in Malaysia in January is widely expected to be lower due to a seasonal drop in yields, but end-January stockpiles could rise to 2.66 million-2.70 million tons, beating end-December’s record high of 2.63 million tons, due to weak exports, analysts and planters said. The palm oil market could turn choppy in the holiday-shortened week, trading in a MYR2,400-MYR2,490/ton range as traders limit activity and move to the sidelines.

Investors will be eyeing January export estimates by cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd., due Thursday. Open interest on the BMD was 177,786 lots, versus 185,630 lots Friday. One lot is equivalent to 25 tons.           [Dow Jones Newswire]

Total traded volumes stood at 30,506 lots of 25 tonnes each, higher than the usual 25,000 lots. Technical analysis shows palm oil is expected to test a resistance at 2,486 ringgit per tonne, a break above which will lead to a further gain to 2,522 ringgit, said Reuters market analyst Wang Tao.

Shipments for the first 25 days of the month suffered a double-digit decline on lower Chinese and European demand, raising worries that stocks could still climb higher in January after hitting a record 2.63 million tonnes last month. Palm oil exports from Indonesia fell 4 percent to 1.9 million tonnes in December from the previous month, industry data showed on Tuesday.

Brent crude stayed above $113 on Tuesday on hopes that economic growth might be picking up in the world's largest oil consumer after a gauge of planned U.S. business spending rose in December, adding to recent positive global economic data.  In competing vegetable oil markets, U.S. soyoil for March delivery edged up 0.1 percent in late Asian trade. The most active September soybean oil contract on the Dalian Commodity Exchange closed 0.5 percent lower.          [Reuters]

Today’s Support and Resistance for benchmark April contract is located around 2,440 and 2,500 respectively.