14/05/2012 (Borneo Post) -  Crude palm oil futures (FCPO) on Bursa Ma­laysia Derivatives fell sharply this week due to concerns about the global economy slowdown and weak palm oil demand.

The benchmark FCPO July contract plunged RM83 or 2.47 per cent to close at RM3,275 per tonne on Friday from RM3,358 per tonne last Friday.

The trading range for the week was from RM3,265 to RM3,388.

Total volume traded for the week amounted to 136,742 contracts, up 22,991 contracts from the previous week.

The open interest as at Thursday decreased to 123,267 contracts from 128,166 contracts the previ­ous Thursday.

The election results in Greece and France on Sun­day raised concerns of the investors on the effort of the eurozone governments to tackle its debt crisis as it may undermine the austerity programs which planned earlier to contain the debt crisis from spread­ing.

The palm oil market got a little boost during the midweek when the market anticipated the palm oil stocks in April would fall further.

The Malaysian Palm Oil Board (MPOB) released its monthly reports on Malay­sian palm oil’s supply and demand for April 2012 on Thursday with palm oil stocks were lower at 1.848 million tonnes, a drop of 5.41 per cent from the previ­ous month.

The exports in April improved 0.14 per cent to 1.331 million tonnes while the palm oil production rose 5.07 per cent to 1.273 million tonnes.

However, the palm oil market was unable to sus­tain long at higher level when the export data in May indicating slowdown in demand from the top consumer countries like China and India.

Cargo surveyor ITS re­leased the palm oil export figures for the period of May 1 to 10 the same day at 450,269 tonnes, a drop of 5.99 per cent while another surveyor SGS at 419,364 tonnes, a plunge of 14.2 per cent from the same period last month.

US Department of Agri­culture (USDA) released a bullish monthly report on soybean supply and demand later on Thursday night with soybean end­ing stocks for 2011/12 in US falling to 210 million bushels from the previous report while the soybean ending stocks for 2012/13 at 145 million bushels, below the average market expectation of 164 million bushels.

However, the bullish soybean reports released by USDA overnight failed to support the palm oil market much with the news of the US$2 billion trading loss at JP Mor­gan hit the headline next day.

The unexpected bad news from JP Morgan sparked traders to further liquidate positions in riskier assets like com­modities and moved to other safer assets.

Technical View
The benchmark July con­tract tested our major sup­port at RM3,270 on Friday with continuous waves of bad news pouring into the market this week.

The benchmark July will change to August month next Wednesday.

With the weak market sentiment and lower export demand in May currently, the palm oil market would face tremendous selling pressure.

If the support at RM3,270 is broken, the RM3,628 level would be set as the high of the year.

Resistance would be pegged at RM3,388 and RM3,439 while support was set at RM3,270 and RM3,190.

Major fundamental news this coming week

Malaysian export data for May 1-15 by ITS and SGS on May 15.