Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week higher boosted by the robust export demand and the expectation of lower palm oil production in March.
The benchmark FCPO June contract surged RM43 or 1.28 per cent to close at RM3,398 per tonne on Friday from RM3,355 per tonne last Friday. The trading range for the week was from RM3,309 to RM3,418.
Total volume traded for the week amounted to 121,851 contracts, up 29,341 contracts from the previous week. The open interest as at Thursday increased to 131,180 contracts from 124,767 contracts the previous Thursday.
Cargo surveyor ITS released the palm oil export figures for the period of March 1 to March 15 on Thursday at 697,804 tonnes, a surge of 37.06 per cent while another surveyor SGS at 701,536 tonnes, a jump of 41.93 per cent from the same period last month.
Most of the increase in exports demand came from crude palm oil where the crude palm oil exports jumped more than five folds to above 160,000 tonnes during the first 15 days in March compared with the same period in February.
This strong exports demand was partly due to the release of the tax-free crude palm oil export quota by the Malaysian government last month coupled with the rising demand from top consumer countries like China, European Union countries and India over the concerns on tighter global soybean supplies this year.
The US Department of Agriculture (USDA) released its weekly US soybeans export report on Thursday at 1.393 million tonnes, far above the analysts’ expectation of 650,000 to 900,000 tonnes. China was reported as the major buyer of the US soybeans which gave further boost to the soybean prices.
Traders would be closely monitoring the grain planting forecasts released by USDA end of this month which would give the traders information about the intention of the US farmers on the planting acreage of corn, soybean and wheat.
Soybean prices were expected to be firm in order to fight for more acreage compared with corn in the new crop year.
The Malaysian Palm Oil Board (MPOB) released its monthly reports on Malaysian palm oil’s supply and demand for February 2012 on Monday with palm oil stocks surprisingly increasing to 2.06 million tonnes from 2.019 million tonnes the previous month as the drop in exports demand outpaced the fall in production.
The stock level was against the fall in Reuter’s poll estimation of 1.948 million tonnes. The exports in February declined 12.58 per cent to 1.211 million tonnes while the palm oil production slipped 7.93 per cent to 1.185 million tonnes.
Technical View
The palm oil prices were able to shrug off the bearish MPOB reports with the back of strong exports data from the cargo surveyors and more demand prospects were expected in the coming weeks.
The benchmark June contract continued to surge this week and currently had consolidated around RM3,400 level. Palm oil prices would be expected to test the tougher resistance at RM3,465 to RM3,500 levels soon if the exports pace remained robust. Resistance would be pegged at RM3,465 while support was set at RM3,350 and RM3,270.
Major fundamental news this coming week
Malaysian export data for March 1 to March 20 by ITS and SGS on March 20.
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.