Weekly Crude Palm Oil Report March 11 2012

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Crude palm oil futures (FCPO) on Bursa Ma­laysia Derivatives ended the week sharply higher boosted by the bull­ish outlook by top industry analysts during the annual palm oil conference in Kuala Lumpur. The benchmark FCPO May contract soared RM96 or 2.95 per cent to close at RM3,355 per tonne on Friday from RM3,259 per tonne last Friday. The trading range for the week was from RM3,222 to RM3,368.

Total volume traded for the week amounted to 92,510 con­tracts, down 11,603 contracts from the previous week. The open interest as at Thursday increased to 124,767 contracts from 123,480 contracts the previous Thursday.

The Palm and Lauric Oils Price Outlook Conference (POC 2012), organised by Bursa Malaysia Derivatives from March 5 to March 7 in Kuala Lumpur, Malaysia received an overwhelming response by the global edible oils industry players.

The POC 2012 that cel­ebrated its 23rd year of anniversary was one of the most successful events in the global edible oils industry, attended by 2,000 delegates from more than 40 countries globally.

One of the top industry analysts, Dorab Mistry main­tained his forecast on palm oil prices which would hit RM4,000 per tonne by June due to tight soy oil supply from South America, season­al demand from India during summer and requirements by the Muslim countries for festive season before fasting month in mid July.

Another analyst, Thomas Mielke projected the refined, bleached and deodorised palm olein for Malaysia could touch US$1,180 per tonne while crude palm oil prices in Rotterdam at US$1,150 per tonne in 2012.

He added the decline of about 20 million tonnes in the global soybean produc­tion and the low cycle of palm oil production in Ma­laysia and Indonesia would give a bullish scenario and support the palm oil prices overall.

Meanwhile, James Fry, another renowned analyst, linked the palm oil prices to Brent crude oil prices where the palm oil prices would be in the range of RM3,250 to RM3,350 per tonne depend­ing on the stock level in Malaysia if the Brent crude oil prices hovered around US$125 per barrel.

US Department of Agri­culture (USDA) released a mixed monthly report on soybean supply and demand on Friday with soybean end­ing stocks in US remained at 275 million bushels from the previous report, above the average market expectation of 260 million bushels.

However, USDA reduced its projection of the glo­bal soybean ending stocks for 2011/12 to 57.3 million tonnes from 60.28 million tonnes from the previous month due to the lower pro­duction forecast for South America.

This might boost some export demand from South America to the US suppliers which would be supportive to the soybean prices.

Technical View

The benchmark may con­tract continued its rally reaching the high of RM3,368 on Friday, a level not seen since June last year.

The strong closing this week opened the way for palm oil prices to test the tougher resistance at RM3,465 to RM3,500 levels in the coming weeks.

The benchmark will switch to june contract on Friday. Resistance was pegged at RM3,465 while support was set at RM3,270 and RM3,200.

Major fundamental news this coming week

MPOB’s monthly supply-demand report on March 12, Malaysian export data for March 1 to March 10 by ITS and SGS on March 12 and the export data for Mar ch1 to March 15 by ITS and SGS on March 15.