FCPO Daily Chart Source: OPF Charting System
Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives soared this week due to the continuous concerns over the development of the La Nina weather pattern as well as lower than expected palm oil stocks.
The benchmark FCPO January contract jumped RM122 or 4.05 per cent to close at RM3,135 per tonne on Friday from RM3,013 per tone seen last Friday. The trading range for the week was from RM2,984 to RM3,160.
Total volume traded for the week amounted to 113,144 contracts, up 8,712 contracts from the previous week. The open interest on Thursday increased to 136,363 contracts from 131,461 contracts the previous Thursday.
The US Department of Agriculture (USDA) released a bearish monthly report on soybean supply and demand on Wednesday with soybean ending stocks jumped to 195 million bushels from 160 million in the previous report.
The ending stocks figure was well above the average market expectation of 182 million bushels.
The Malaysian Palm Oil Board (MPOB) released its monthly reports on Malaysian palm oil’s supply and demand for October 2011 on Thursday with palm oil stocks declining from its previous month’s high.
The palm oil stocks reduced to 2.1 million tonnes in October from 2.134 million tonnes the previous month as strong export demand outpaced the weaker production growth.
Last week, a Reuter’s poll estimated the palm oil stocks to increase to 2.25 million tonnes. The exports jumped 19.04 per cent to 1.84 million tonnes while the palm oil production in October increased 2.1 per cent to 1.908 million tonnes.
Cargo surveyor ITS released the palm oil export figures for the period of November 1 to 10 on Thursday at 467,600 tonnes, a drop of 5.9 per cent while another surveyor SGS garnered 457,696 tonnes for the same period, a decrease of 6.0 per cent from the same period last month.
The development of La Nina and the monsoon season during the year end will remain the major focus in coming weeks.
The progress in eurozone debt crisis would also be monitored even though the recent palm oil price movement had shrugged off the negative news from Europe as the traders were more concerned on the tighter palm oil supply.
Technical View
The benchmark January contract posted a strong gain during the week by closing at RM3,135, a level unseen since early of August. The market showed strong buying momentum after the release of bullish MPOB reports on Thursday.
The price had successfully pierced through the EMA 200 resistance, showing the market is ready for rally anytime in long term.
The benchmark month will switch from January to February contract on Wednesday. Resistance would be pegged at RM3,164 and RM3,250 while support was set at RM3,080 and RM3,016.
Major fundamental news this coming week
Malaysian export data for Nov 1 to 15 by ITS and SGS on November 15 and news from China International Oils and Oilseeds Conference (CIOC) 2011 in Guangzhou, China on November 12 to 13.
Earlier, Dorab Mistry, a famous global edible oils analyst, forecasted palm oil prices to increase to RM4,000 by the second quarter 2012 due to the possible return of La Nina during the Globoil conference in India on September 25. He is expected to present his view on November 13 during the CIOC in China.
Oriental Pacific Futures is a Trading Participant and Clearing Participant of Bursa Malaysia Derivatives. They can be reached 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.