FCPO Related News  (Fri, Mar 1)

Crude palm oil futures on Malaysia’s derivatives exchange ended lower Thursday, reflecting investor concern over falling export demand and the prospect of higher global vegoil stockpiles. The benchmark May contract at Bursa Malaysia Derivatives ended 0.6% lower at 2,396 ringgit a metric ton, reversing gains in early trade. The contract fell as much as 2.1% to MYR2,368/ton, the lowest since Jan. 14. "From a technical perspective, palm oil looks set to repeat a bearish pattern seen during the May-September period last year," said Chandran Sinnasamy, trading head at LT International. "Bearish traders seem to have a firm grip on the market and aren’t loosening it for now, so there is potential for further price falls" in coming months.

Also undermining palm oil futures is lower export demand in February. Cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. estimate shipments fell 9.1% and 8.8%, respectively. Crude shipments from Malaysia have risen ahead of a 4.5% tax hike on crude grades from March 1, but not enough to offset lower demand for refined grades, data showed. Refined palm cargoes account for the bulk of Malaysian palm shipments, according to data from the Malaysian Palm Oil Board. Intertek said crude cargoes rose 16% to 402,110 tons in February, whereas SGS put the figure at 386,294 tons, up 20%.

Palm oil production in Malaysia, the world’s second-largest producer, probably eased 17% to 18% from the previous month, though market participants said that may not ease stockpiles significantly due to disappointing export demand. Inventories at the end of February are likely to be slightly lower or unchanged from January’s 2.58 million tons. The Malaysian Palm Oil Board is scheduled to issue February crop data on March 11. In the cash market, refined palm olein for March shipment was offered at $810/ton while cash CPO for prompt shipment was offered at MYR2,360/ton. Open interest on the BMD was 166,648 lots, versus 166,799 lots Wednesday. One lot is equivalent to 25 tons. A total of 54,738 lots of CPO were traded versus 34,090 lots Wednesday.           [Dow Jones Newswire]

Malaysian palm oil futures fell to a more-than-six-week low on Thursday, extending losses into a seventh straight session on bleak export data and improved weather in Latin America. Losses were curtailed as India's national budget made no immediate decision on an import tax hike. India, the world's largest vegetable oil buyer, did not raise its import tax imposed in January to cut rising purchases from Malaysia and Indonesia, a move that could have hurt palm oil demand further.

Weaker demand for Malaysian palm oil product exports during February, which fell 9.1 percent to 1.33 million tonnes from 1.46 million tonnes in January, still weighed on the market. "The market is on a bearish note after recent improvements in the South American weather, and export figures were not as good as everyone has expected," said a Singapore-based trader with a global commodities trading house. "The market was expecting for the export tax to be increased. Now it stays the same there may be some selling pressure in the local market."  India last month slapped a 2.5 percent import tax on crude palm oil and lifted a six-year-old freeze on base import prices, the benchmark to calculate import taxes on edible oils.

Technicals showed Malaysian palm oil is expected to fall to 2,361 ringgit per tonne, said Reuters market analyst Wang Tao. A break below there would lead to a further loss to 2,306 ringgit, he said.

In other markets, Brent crude oil rose above $112 a barrel on Thursday, supported by renewed confidence that major central banks would keep taking steps to support the global economy. In competing vegetable oil markets, U.S. soyoil for May delivery edged down 0.4 percent in late Asian trade.           [Reuters]

Today’s Support and Resistance for benchmark May contract is located around 2,360 and 2,420 respectively.