22/1/07 (The Star)

CRUDE PALM OIL

BURSA Malaysia Derivatives crude palm oil (CPO) futures prices jumped sharply in early trading last week in response to weekend flooding in Johor and Pahang. The strong gap-up move, however, failed to generate any follow-through buying and prompted earlier bullish players to take profits, forcing prices to drift sideways-to-lower for the rest of the week before closing Friday with minor losses. 

Lacklustre and softer trading conditions were attributed to lower exports in the first half of January and mixed opinions about the impact of the second round of monsoon rains. Output of Malaysian CPO declined 26.3% to 1.14 million tonnes in December on account of the earlier monsoon flooding. 

Societe Generale de Surveillance estimated the exports of Malaysian palm oil products for the first 15 days of January to be lower at 472,3181 tonnes, down 6.1% from the same period in December. 

The April CPO futures prices slumped from the week’s high of RM1,950 to RM1,873 and closed the week lower at RM1,875, down RM14 per tonne from the previous week and off RM75 from its intra-week’s high. 
Total trading for the week dipped to 71,922 contracts from 85,674 contracts the week before.

For this week, the April futures has an immediate chart support at the RM1,860-RM1,850 level. Chart resistance for this week is lowered slightly to the RM1,890-RM1,915 level. 


SOYOIL

CHICAGO Board of Trade (CBOT) soybean oil futures prices turned softer last week and traded on both sides of the previous close before ending the week with minor losses. 

Bearish US soybean supplies and good crop weather in South America soybean growing regions that could increase yield potentials helped dampen sentiment. Rallies in corn futures prices provided soyoil with occasional minor lifts.

Last week, the United States Department of Agriculture (UDSA) reduced its US soybean crop output figure to 3.188 billion bushels from 3.204 billion. USDA also increased its 2006/07 US soybean ending-stocks estimates by 10 million bushels to 575 million bushels from its December estimate.

The March futures prices closed lower by 0.35 point at 28.80 US cents per pound. Trade for the week ranged from the week’s high of 29.23 to 28.66 US cents per pound.

The weekly indicators closed the week mixed and indicated that the market will continue the downward drift this week.