Reversal Signs Continue in Palm Oil Market
FCPO closed higher at 5539 after gap filled at 5612 by last Friday but posted weekly losses.
What were the factors that caused crude palm oil prices struggling to maintain above 5800?
1. India reduce farm infrastructure tax on CPO to 5%, which will effective until Sept 30, with the objective to increase gap between CPO and refined palm oil to benefit the domestic refining industry.
2. Uncertainties over Ukraine crisis lead market to stay vigilant on possible rising tensions.
3. Better production forecast for 1st half of Feb limited the upside of palm oil prices
4. Soybean Oil continue to move higher as concerns over weather forecast and fire incident broke in US biodiesel plant at Claypool, Indiana. Furthermore, India acquire massive purchase on soybean oil as high soybean price for local crushers to reduce output.
5. Crude Oil prices extended losses as prospects of extra supply from Iran. Weaker crude make palm less attractive option for biodiesel feedstock.
6. Near month spread widen as traders foresee East Malaysia production remains weak for Feb.