FCPO Related News (Mon, Mar 25)

[ Malaysia Mar 1-25 Palm Oil Export 1.07 million tons, down 7.5% - ITS]

Crude palm-oil futures on Malaysia’s derivatives exchange rose to their highest for a month on Friday as investors covered short positions on easing stockpiles at a time when palm oil yields remain weak. The benchmark June contract on Bursa Malaysia Derivatives rose as much as 2% to 2,503 ringgit a ton, a level not seen since Feb. 22. The contract ended at 2,494 ringgit a metric ton–up 1.5% from Wednesday’s close. Palm-oil prices are up 3.2% this week on expectations firmer export numbers from cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd., could help to draw down stockpiles that reached 2.44 million tons at end-February in Malaysia.

Price-supportive outlook by eminent oilseed analyst Dorab Mistry provided the catalyst for further gains, a trading executive at a Kuala Lumpur-based brokerage said. "The bears rushed to cover short positions after price sailed past MYR2,480/ton," he said and tips prices to rally toward MYR2,547/ton next week. Yields in the current low-production cycle have begun to decline sharply, said Dorab Mistry, who heads the edible oils trading desk at London-based Godrej International Ltd. "This means the low cycle is projected to be somewhat more severe than anticipated." Output of palm oil generally falls in the November-March period before yields improve and peak around September-October period.

Mr. Mistry now expects palm-oil production in the first half of 2013 to be lower than expected and may help to draw-down palm-oil stockpiles in the world’s No. 2 producer "significantly." "Malaysian stocks [may] dip below 2 million tons in June," Mr. Mistry told an industry conference in Beijing. He also revised his near-term outlook on prices and now tips palm oil on Malaysia’s derivatives exchange to trade within a 2,400 ringgit-2,700 ringgit a ton range until end-May. At an industry conference earlier this month in Malaysia, he tipped prices to trade in a MYR2,300-MYR2,500/ton until end-April. Open interest on the BMD was 169,633 lots versus 166,419 lots on Thursday. One lot is equivalent to 25 tons. A total of 48,750 lots of CPO were traded versus 39,194 lots on Thursday.          [Dow Jones Newswire]

Palm prices were lifted by Malaysian palm oil exports that rose 11 percent for the March 1-20 period to 927,665 tonnes, up from 835,612 tonnes a month ago, according to cargo surveyor Intertek Testing Services. Another cargo surveyor, Societe Generale de Surveillance, reported a 14 percent increase for the same period. "If exports continue at this rate, we will see a figure of around 1.4-1.5 million tonnes for the full month," said a trader with a foreign commodities brokerage in Malaysia. "Stocks will come down even more and this trend may continue into April." "Exports in March should be much better than February's. With exports up and production going down, end-stocks in March could go below 2.35 million tonnes," said a trader with a foreign commodities brokerage in Kuala Lumpur.     

   

Also playing on general market sentiment were concerns about a possible debt default by Cyprus, which could hit the euro zone's fragile recovery and crimp edible oil demand.  Traders will be looking out for the next export data due on Monday as they say demand needs to pick up faster to bring stockpiles to comfortable levels. Record stocks last year had dragged prices down more than 20 percent, palm's worst performance since the 2008 global financial crisis.

  

In other markets, Brent crude held above $107 a barrel, but was still on track for a second straight week of losses, as Cyprus scrambled to raise money to avert a financial meltdown that could disrupt the eurozone's recovery and diminish its oil demand.  In other vegetable oil markets, U.S. soyoil for May delivery  was almost flat in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange inched down 1 percent.             [Reuters]

Today's Support and Resistance for benchmark June contract is located around 2,460 and 2,510 respectively.