FCPO Related News (Mon, Feb 18)

Malaysian palm oil futures fell to their lowest in more than two weeks on Friday, giving up earlier gains as investors turned cautious after the government raised its crude palm oil export tax for March. The edible oil rose in the morning session after cargo surveyor Intertek Testing Services reported a 18.1 percent increase in Malaysian palm oil exports for the first half of February from a month ago. Another cargo surveyor, Societe Generale de Surveillance, also reported a 13.6 percent rise in shipments for the same period.

But selling pressure emerged after the world's No.2 palm oil producer said it will set its crude palm oil export tax for March at 4.5 percent, up from February's zero percent, making the crude grade more expensive for overseas buyers. "The export tax was more important in the traders' minds," said a dealer with a foreign commodities brokerage in Kuala Lumpur. The benchmark April contract  on the Bursa Malaysia Derivatives Exchange closed 0.4 percent lower at 2,486 ringgit ($804) per tonne. Prices dropped as low as 2,476 ringgit, the lowest level since Jan. 30. Total traded volumes stood at 27,269 lots of 25 tonnes each, slightly higher than the average of 25,000 tonnes. For the week, palm oil posted a 2.9 percent loss, snapping four straight weeks of gains.

A zero-percent duty tax structure introduced by Malaysia in January and February had provided positive sentiment for investors, but forecasts of bumper soy crops in Latin America, palm's vegetable oil competitor, has weighed on the market and kept prices rangebound. "For the past few months, high stockpiles and improving weather conditions in Brazil and Argentina have continued to weigh on prices," said Phillip Futures analyst Ker Chung Yang in Singapore. 

In other markets, Brent crude eased below $118 per barrel on Friday and was heading for its first weekly loss in five after disappointing euro zone data revived concerns about the troubled region. In competing vegetable oil markets, U.S. soyoil for March delivery inched up 0.1 percent in late Asian trade. The Dalian Commodity Exchange is closed for the Lunar New Year holidays and will resume trading on Monday.          [Reuters]

Indonesia set February CPO duties at 9% from 7.5% previously. "CPO exports in March are likely to be much lower due to the 4.5% tax rate and Indian importers have bought quite a fair bit in January. Palm oil port stocks at Indian ports are also filing up–so we expect buying to slow down soon," said Chandran Sinnasamy, head trader at Kuala Lumpur-based LT International. Palm oil’s bearish technical cues and improving crop weather in parts of Argentina and Brazil added to the weaker tone in palm oil.

Palm oil is a direct substitute of soy oil. "Palm oil values have traded in the MYR2,217-MYR2,615/ton range the past four months and bullish traders failed to take prices past MYR2,615/ton for the technical landscape to turn convincingly bullish. Therefore, I believe prices are poised to ease back to MYR2,400/ton in the short term," Mr. Sinnasamy said. Open interest on the BMD was 170,163 lots versus 174,821 lots Thursday. One lot is equivalent to 25 tons. A total of 28,733 lots of CPO were traded versus 20,263 lots Thursday.           [Dow Jones Newswire]

Today’s Support and Resistance for benchmark May contract is located around 2,483 and 2,537 respectively.