Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week slightly higher in thin trading this week as most traders were away for holiday season during year end.
The benchmark FCPO March contract increased RM5 or 0.16 per cent to close at RM3,175 per tonne on Friday from RM3,170 per tonne last Friday.
The trading range for the week was from RM3,139 to RM3,205.
Total volume traded for the week amounted to 68,391 contracts, down 31,586 contracts from the previous week.
The open interest as at Thursday increased to 113,036 contracts from 111,428 contracts the previous Thursday.
The crude palm oil prices wrapped up the year in a 16 per cent decline in 2011 compared with a 42 per cent gain in 2010 due to strong palm oil production, a slower global economic growth and the worries over the eurozone debt crisis.
The US soybean oil prices also fell 10 per cent in 2011 whereas it gained 43 per cent in 2010.
However, the NYMEX crude oil prices rose for the third consecutive years in a row with an eight per cent increase in 2011 compared with a 15 per cent up in 2010.
The persistent heavy rains in key palm oil producing states in Malaysia continued to underpin palm oil prices this week.
Most traders expected the palm oil production in December to decline 15 to 20 per cent due to bad weather which disrupted the palm oil harvesting and transportation.
Dry weather in South American also boosted soybean oil prices for the past two weeks.
The limited rains in Brazil and persistent dry weather in Argentina remained concern over the corn and soybean planting progress there.
Some light rains are expected to fall in South American in the coming two weeks.
In addition, Iran threatened to stop supplying its crude oil through the Strait of Hormuz supported the crude oil prices which would also underpin the vegetable oils’ prices in general.
Cargo surveyor ITS released the palm oil export figures for the period of December 1 to 25 last Saturday at 1,181,141 tonnes, a drop of 11.55 per cent while another surveyor SGS released its exports data on Tuesday at 1,182,707 tonnes, a decrease of 11.93 per cent from the same period last month.
No major heavy rains warning by the Malaysian Meteorological Department in key palm oil producing states next week but a weak low-pressure system was developed over the South China Sea on Friday which would bring intermittent rain to other states in Malaysia until January 1.
Malaysian market will be closed on Monday celebrating New Year.
Technical View
The benchmark March contract was lacklustre in thin volume with not many activities in place this week.
The market overall was still supportive with weather problem remained the concern both in Southeast Asian and the South American countries. The palm oil prices will get further boost if the weather condition is getting worse in January.
Resistance would be pegged at RM3,270 while support was set at RM3,080 and RM3,000.
Major fundamental news this coming week
Malaysian export data for the full month of December by SGS on January 3.
The export demand in December was expected to be 1.4 million tonnes.
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.