Weekly Crude Palm Oil Report May 12 2013

Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives rebounded this week due to lower palm oil stocks which spurred technical buying and short covering in the market.

The benchmark FCPO July contract rose RM67 or 2.98 per cent to settle at RM2,319 per tonne on Friday from RM2,252 per tonne last Friday. The trading range for the week was from RM2,230 to RM2,334.

Total volume traded for the week amounted to 120,577 contracts, up 4,394 contracts from the previous week. The open interest as at Thursday increased to 167,552 contracts from 164,551 contracts the previous Thursday.

MPOB released bullish monthly reports on Malaysian palm oil’s supply and demand for April 2013 on Friday with palm oil stocks continuing to fall sharply to 1.927 million tonnes, a decrease of 11.35 per cent from the previous month. This was the lowest palm oil stocks level in nine months and was far below the average estimation of Reuter’s poll at 2.04 million tonnes.

According to the report, the exports in April fell 5.62 per cent to 1.449 million tonnes while the palm oil production rose 3.12 per cent to 1.366 million tonnes. Again, both exports and production figure were bullish as the exports fell lesser than the Reuter’s poll at 1.4 million tonnes while the production increased lesser than the expectation of 1.388 million tonnes.

However, the gains were limited with the poor performance of the first 10 days exports demand in May.

The cargo surveyor ITS released the palm oil export figures for the period of May 1 to May 10 on Friday at 380,047 tonnes, a sharp fall of 16.74 per cent while another surveyor SGS at 377,193 tonnes, a plunge of 18.41 per cent from the same period last month.

During the beginning of the week, palm oil prices were under selling pressure as the ringgit was strengthening to below RM3 level against dollar after the previous ruling party won the general election on Sunday.

Meanwhile, USDA released its bearish monthly report on soybean supply and demand on Friday with US soybean production for 2013/14 was estimated at record high of 3.390 billion bushels, up from 3.015 billion in the previous report.

USDA pegged the soybean ending stocks for 2013/14 at 265 million bushels, more than double from the ending stocks for 2012/13 at 125 million bushels.

The bearish USDA reports were pressuring the forward months’ soybean prices while the tight soybean supply in near term would remain supportive to the near month’s prices.

Technical view

The benchmark July contract rose this week boosted by falling palm oil stocks and technical buying.

Palm oil prices had successfully broken above the downtrend channel, signalling more room for the prices to move upward.

The prices tested the resistance level of RM2,335 again on Friday but failed to cross above the line.  Since most of the technical indicators turned to positive signals currently, the chances to break above RM2,335 level is very high in the coming session and the prices are expected to rebound further to RM2,400 level.

The benchmark month will switch from July to August month on Thursday.

Resistance is pegged at RM2,335 and RM2,467 while support is set at RM2,260 and RM2,217.

Major fundamental news this coming week

Malaysian export data for May 1to May 15 by ITS and SGS on May 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 

Disclaimer:  This article is written for general information only. The writers, publishers and OPF will not be held liable for any damage or trading losses that result from the use of this article.

Source : The Borneo Post


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