Weekly Crude Palm Oil Report March 10 2013

Crude palm oil futures (FCPO) on Bursa Ma­laysia Derivatives settled the week higher in anticipation of lower palm oil stocks in February.

The benchmark FCPO May contract rose RM80 or 3.38 per cent to settle at RM2,448 per tonne on Friday from RM2,368 per tonne last Friday.

The trading range for the week was from RM2,375 to RM2,451.

Total volume traded for the week amounted to 135,768 contracts, down 61,507 con­tracts from the previous week.

The open interest as at Thursday decreased to 167,859 contracts from 169,795 contracts the previous Thurs­day.

The Reuters poll was re­vealed on Thursday to indi­cate that the palm oil stocks would probably fall for the consecutive two months based on the survey of five plantation companies in Malaysia.

According to the poll, palm oil stocks could fall 6.1 per cent to 2.42 million tonnes as the drop in production was faster than the fall in demand.

The poll showed that the palm oil production might drop 18.1 per cent to 1.31 mil­lion tonnes while the exports fell 14.4 per cent to 1.39 mil­lion tonnes.

The industry players would be waiting for the major fundamental reports to be re­leased Monday for guidance on the palm oil stocks level and the impact on exports demand after the 4.5 per cent increase in export tax for crude palm oil in March.

Earlier this week, most traders and industry play­ers were away from their desks and headed to the an­nual palm oil conference in Kuala Lumpur.

The conference was car­ried out successfully and attended by nearly 2,000 participants from over 55 countries globally.

Analysts were giving mixed signals on the price direction of edible oils in 2013 to 2014.

Focus was paid to two of the top analysts, James Fry and Dorab Mistry’s papers.

Fry was more on the bull­ish side as the current low palm oil prices were very attractive to produce palm methyl-ester as fuel without substantial subsidies from the government.

The demand for palm methyl-ester could improve substantially which may ease the high level of palm oil stocks.

He added that palm oil prices were to trade at RM2,625 per tonne if Brent crude oil prices hovered at US$105 per barrel by June.

Meanwhile, another ana­lyst Dorab Mistry, was also supportive of palm oil prices in mid-term but was bearish on a long term basis.

He tipped that palm oil prices should be trading at the range of RM2,300 to RM2,500 per tonne until end of April.

Thereafter, the palm oil prices might fall to RM2,200 or lower after April due to the increase in soybean sup­ply from South America.

Technical View

The benchmark May con­tract rebounded this week mainly on short covering as some of the top analysts were not as bearish as ini­tially thought.

If the palm oil prices are able to hold above RM2,428 level, there are high chances that the palm oil prices may cover the big gap left behind on February 25, 2013.

Resistance would be pegged at RM2,476 and RM2,527 while support was set at RM2,428 and RM2,332.

Major fundamental news this coming week

MPOB’s monthly supply-demand report on March 11, Malaysian export data for March 1 to 10 by ITS and SGS on March 11 and the export figure for March 1 to 15 by ITS and SGS on March 15.

 Oriental Pacific Futures (OPF) is a Trading Participant and Clearing Participant of Bursa Malaysia Derivatives. You may reach us at www.opf.com.my

Source : The Borneo Post

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