Weekly Crude Palm Oil Report May 27 2012

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week higher boosted by the robust exports demand and the temporary ease of the eurozone debt crisis issue.

The benchmark FCPO August contract rose RM34 or 1.1 per cent to close at RM3,130 per tonne on Friday from RM3,096 per tonne last Friday.

The trading range for the week was from RM2,993 to RM3,149. Total volume traded for the week amounted to 201,821 contracts, down 14,129 contracts from the previous week.

The open interest as at Thursday decreased to 101,849 contracts from 117,925 contracts the previous Thursday. The palm oil market was cheered by the improving exports demand this week as shown by both the cargo surveyors.

Cargo surveyor ITS released the palm oil export figures for the period of May 1 to 25 on Friday at 1,146,406 tonnes, a rise of 10.54 per cent while another surveyor SGS at 1,113,774 tonnes, an increase  of 7.63 per cent from the same period last month.

The Muslim countries like Pakistan and some states in India seemed picking up the demand for palm oil ahead of the fasting month which would start in mid-July.

The increase in demand from the Muslim countries would be expected to offset the drop in exports to China.

Some importers in China may have requested to defer some palm oil shipments to be delivered at a later date due to the plunge in palm oil prices over the recent weeks.

The similar symptom also happened in other markets including soybean, thermal coal and iron ore due to the impact of the economic slowdown in the second largest economy in the world.

Palm oil prices plunged and briefly dipped to the low of RM2,993 on Wednesday due to the uncertainty in eurozone debt crisis and the fears that Greece might leave the eurozone.

In addition, the US grain markets were badly hit earlier of the week as the weather condition in US was improving with cooler temperatures and rains were sighted in key growing regions in the coming weeks, easing worries over the hot and dry weather pattern last week.

US Department of Agriculture (USDA) reported that US soybean crop was 76 per cent planted as at May 20, up from 46 per cent in the previous week and well above the five year average at 42 per cent.

With the favourable weather condition currently, the traders expected US would be very likely to have bumper crop this year if the good weather condition remained.

However, there was some weather forecasters highlighted the possibility of the development of El Nino weather pattern later of this year which was still in a very preliminary stage.

The CME Group had expanded its grain’s trading hours to 21-hour each day from 6am to 3am (Malaysian time), from Mondays to Saturdays’ morning effective from this week onwards.

Technical View  

The benchmark August contract briefly dipped below RM3,000 this week and rebounded strongly thereafter.

The strong closing for the week indicated the current downtrend was temporary ended and would be expected to continue its rebound next week.

Resistance would be pegged at RM3,190 and RM3,270 while support was set at RM3,000 and RM2,917.

Major fundamental news this coming week

Malaysian export data for the full month of May by ITS and SGS on May 31.

You can share this posts:

Leave a Reply