FCPO Daily Chart Source: OPF Charting Systemwww.
Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives extended the gain this week due to concerns over the development of the La Nina weather pattern and short-covering activities.
The benchmark FCPO January contract surged RM41 or 1.38 per cent to close at RM3,013 per tonne on Friday from RM2,972 per tonne last Friday.
The trading range for the week was from RM2,914 to RM3,020.
Total volume traded for the week amounted to 104,432 contracts, down 14,423 contracts from the previous week.
The open interest as at Thursday increased to 131,461 contracts from 129,162 contracts the previous Thursday.
Earlier this week, the global equities and commodities faced a tremendous selling pressure when the Greek government unexpectedly announced a referendum on its bailout plan.
The sentiment was worsen with the news of bankruptcy filing by one of the US largest futures trading firm, MF Global on Monday which shocked investors.
However, the palm oil market rebounded later in the week supported by weather-related news.
The monsoon season in Southeast Asia during the end of the year could worsen with the development of the La Nina weather pattern.
La Nina usually brings higher than average rainfall which would disrupt the palm oil harvesting progress and reduce oil yield content.
Short-covering activities were seen and traders were positioning their portfolios ahead of the long weekend holiday and the release of major fundamental reports next week.
A Reuters poll revealed on Friday that Malaysian palm oil stocks were likely to increase further in October from the previous month as production remained higher than the strong export demand growth.
According to the poll, palm oil stocks in October were expected to rise 6.1 per cent to 2.25 million tonnes while production would increase 1.6 per cent to 1.9 million tonnes.
Exports were estimated to surge 9.1 per cent to 1.68 million tonnes.
Cargo surveyor ITS released the palm oil export figures for the full month of October on Monday at 1,650,415 tonnes, an increase of 8.51 per cent while another surveyor SGS at 1,684,077 tonnes, a rise of 11.9 per cent from the same period last month.
Malaysian market will be closed on November 7 celebrating Hari Raya Haji.
Technical view
The benchmark January contract closed above RM3,000 for the week showed a positive sign and persistent buying momentum occurred.
Palm oil market would still be consolidating at current range but it was forming a solid support base here for the coming rally.
If the price was able to break above RM3,016, it would be going to test the EMA 200 resistance at RM3,088.
Resistance would be pegged at RM3,016 and RM3,088 while support was set at RM2,917 and RM2,850.
Major fundamental news this coming week
USDA’s monthly supply-demand report on November 9, MPOB’s monthly supply-demand report on November 10, Malaysian export data for Nov 1 to 10 by ITS and SGS on November 10 and news from China International Oils and Oilseeds Conference 2011 in Guangzhou, China on Nov 12 to 13.
Oriental Pacific Futures (OPF) is a Trading Participant and Clearing Participant of Bursa Malaysia Derivatives. You may reach us at www.opf.com.my.
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