Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week higher due to improving palm oil demand outlook and spillover strength from US soybean and crude oil markets.
The benchmark FCPO May contract surged RM34 or 1.05 per cent to close at RM3,276 per tonne on Friday from RM3,242 per tonne last Friday.
The trading range for the week was from RM3,230 to RM3,294.
Total volume traded for the week amounted to 115,218 contracts, down 16,144 contracts from the previous week.
The open interest as at Thursday decreased to 123,129 contracts from 127,987 contracts the previous Thursday.
The US Department of Agriculture (USDA) forecasted the US soybean ending stocks would reduce to 205 million bushels in year 2012/13 from 275 million bushels in 2011/12 during its annual outlook forum on Friday.
The estimation of tighter soybean ending stocks coupled with the weaker dollar provided support to the US soybean prices.
Most analysts projected a lower soybean production in South America due to unfavourable weather condition also underpinned the soybean prices as this might shift the demand prospects to US suppliers.
In addition, the US crude oil hit above US$109 a barrel on Friday, the highest level in nine months, as tensions increased between the West and Iran over the Iran’s nuclear programme.
The external factors currently gave a firm support to crude palm oil prices, overshadowed the concerns on the weak global economic growth especially in Europe.
Cargo surveyor ITS released the palm oil export figures for the period of February 1 to February 20 on Monday at 783,112 tonnes, a drop of 2.01 per cent while another surveyor SGS at 777,728 tonnes, a decrease of 0.55 per cent from the same period last month.
The latest exports data showed a significant increase in exports during the last five days compared with the exports figure for the first 15 days in February.
Some traders estimated the export pace would be maintained and the exports for the first 20 days in February might rise one per cent to 992,000 tonnes.
Palm oil producers estimated the production might fall seven to eight per cent in February.
With the increase in export demand and decrease in the production, these might bring palm oil stocks to below two million tonnes in February.
Meanwhile, the listing of Felda Global Ventures Holdings Bhd which was scheduled in mid-2012 could be delayed due to the objection by the farmers over the new structure in the listed company.
Technical view
The benchmark May contract was seen consolidating at high prices within the radius of RM30 range from RM3,270 level after the strong rally of the previous week.
Traders would start paying attention to any news and market forecasts by some of the global renowned analysts prior to the annual palm oil conference which would be held in Kuala Lumpur from March 5 to March 7.
Overall market remained supportive with upward bias.
Resistance would be pegged at RM3,350 and RM3,465 while support was set at RM3,200 and RM3,085.
Major fundamental news this coming week
Malaysian export data for February 1 to February 25 by SGS on February 27 and export data for the full month of February by ITS and SGS on February 29.
Oriental Pacific Futures is a Trading Participant and Clearing Participant of Bursa Malaysia Derivatives. They can be reached 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.