FCPO Related News ( Tues, Apr 9 )

Malaysian palm oil futures edged up to more than one-week

highs in thin trade on Monday as investors pinned their hopes on stockpiles having eased further in March, signalling stronger demand for the tropical oil, although the ringgit's recent rise capped gains.  By Monday's close, the benchmark June contract  on the Bursa Malaysia Derivatives Exchange had climbed 1.7 percent to 2,400 ringgit ($784) per tonne. Prices earlier in the day touched 2,402 ringgit, the highest since March 29. Total traded volumes were thin at 26,880 lots of 25 tonnes each, compared to the average 35,000 lots seen so far this year. The ringgit edged 0.1 percent lower against the dollar on Monday, giving up some gains after hitting its highest in more than 2 months on Friday due to short-covering ahead of upcoming elections.  

Analysts said lower stocks may provide support for prices. "We believe the overall data should be short-term positive to crude palm oil prices," Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank, said in a note to clients on Friday. The bank is revising its March inventory forecast slightly down to 2.26 million tonnes from 2.31 million tonnes earlier after revising its production and exports estimates, Lim said.  A Reuters poll forecast Malaysia's palm oil stocks in March to have edged lower to 2.35 million tonnes as production likely eased 1.2 percent from a month ago.

Stocks stood at 2.44 million tonnes at the end of February, down from a record 2.63 million tonnes at the end of December. "The market is kind of slow today prior to the MPOB data, but should be supportive because we're expecting stocks to reduce," said a trader with a foreign commodities brokerage in Malaysia. But a strong ringgit will make margins turn worse for refiners, the trader said. "Most likely refiners will opt to stay on the sidelines, because if they buy CPO the margins will be very negative," the trader said. Investors are also keeping an eye on cargo surveyor export data due on Wednesday that will reveal Malaysia's shipments of palm oil products for the first ten days of April. Higher demand for refined products in March had helped offset lower crude palm oil shipments caused by a 4.5 percent export duty implemented for the month. The duty was up from zero percent in February.

In other markets, Brent crude rose towards $105 per barrel on Monday as plans to stimulate Japan's economy lifted financial markets, but the oil benchmark remained near an eight-month low on worries over global economic growth and fuel demand. In vegetable oil markets, U.S. soyoil for May delivery rose 1.0 percent in late Asian trade. The most active September soybean oil contract on the Dalian Commodities Exchange climbed 0.7 percent.

A Reuters survey of five plantation companies showed Malaysia's palm oil stocks likely edged to a 7-month low in March at 2.35 million tonnes. Technical analysis indicated palm oil faces resistance at 2,400 ringgit per tonne, a break above which will lead to a further gain to 2,420 ringgit, said Reuters market analyst Wang Tao.

Today’s Support and Resistance for benchmark June contract is located around 2,396 and 2,426 respectively.