Crude palm oil futures (FCPO) on Bursa Malaysia Derivat ives ended the week lower in cautious trading as traders were digesting the mixed views from top analysts during an industry conference in Bali, Indonesia.
The benchmark FCPO February contract fell RM25 or 1.04 per cent to close at RM2,370 per tonne on Friday from RM2,395 per tonne last Friday.
The trading range for the week was from RM2,359 to RM2,458.
Tot a l volume trade d for the week amounted to 14 3,38 8 contracts, down 35,155 contracts from the previous week.
The open interest as at Thursday increased to 144,168 contracts from 143,012 contracts the previous Thursday.
Dorab Mistry, one of the top global vegetable oils analysts, maintained his view that palm oil prices needed to trade at RM2,200 per tonne over a period of four to six weeks to attract demand and to reduce the current high stocks level.
He forecasted that crude palm oil futures would trade in a range of RM2,300 to RM2,600 per tonne from now until February next year.
He added that the vegetable oil prices was to remain range-bound during the first half of 2013 and to enter a major bear market in the second half of the year.
Another analyst, James Fry, predicted that crude palm oil prices in Europe would be trading around US$1,000 per tonne if the Brent crude oil is trading at US$110 a barrel while the tropical oil prices would be at US$865 per tonne if the Brent crude oil was at US$90 a barrel by June next year.
On the other hand, Thomas Mielke from Oil World, was more optimistic with palm oil prices.
He said that the huge discount between soybean oil and palm oil prices was not sustainable.
He further commented that the world needed more palm oil to offset the fall in global soybean supplies.
Cargo surveyor ITS released the palm oil export figures for the full month of November on Friday at 1,663,092 tonnes, a rise of 3.91 per cent while another surveyor SGS at 1,648,162 tonnes, an increase of 5.17 per cent from the same period last month.
The majority of the increase in export growth was contributed by China and the US.
Indonesian government announced that they would maintain its export tax for crude palm oil at nine per cent in December while the Malaysian government would announce the new crude palm oil export tax at the end of December.
Meanwhile, the weather in South America so far is favourable to the soybean crops and will be closely monitored if there is any weather disruption which will affect the on-going crops planting there.
Bursa Malaysia Derivatives will change the calculation of the daily settlement price for crude palm oil futures contracts effective from December 3 onwards.
The exchange will use the volume weighted average price of the trades executed during the last one minute before the market closes at 6pm as the daily settlement price to prevent distorted closing price.
Technical View
The benchmark February contract was traded in a tight range this week.
We expect the market to remain sideways in the coming few weeks.
Resistance would be pegged at RM2,490 and RM2,634 while support was set at RM2,320 and RM2,220.
Major fundamental news this coming week
No major fundamental reports to be released next week.
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.