Technical Analysis for FCPO Daily Chart Source: OPF Charting System
Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week higher in tandem with the broad gains in the global commodities, an expectation of tighter stock level in the monthly supply and demand reports and the optimism over the debt restructuring agreement in Greece.
The benchmark FCPO April contract surged RM46 or 1.49 per cent to close at RM3,131 per tonne on Friday from RM3,085 per tonne last Friday. The trading range for the week was from RM3,100 to RM3,162.
Total volume traded for the week amounted to 70,013 contracts, down 13,623 contracts from the previous week. The open interest as at Thursday increased to 116,457 contracts from 111,281 contracts the previous Thursday.
The Malaysian Palm Oil Board (MPOB) released its monthly reports on Malaysian palm oil’s supply and demand for January 2012 on Friday with palm oil stocks continued to decline to 2.008 million tonnes from 2.058 million tonnes the previous month as the drop in production outpaced the fall in exports demand.
The stocks level nearly hit the Reuter’s poll estimation of 1.995 million tonnes. The exports in January fell 13.17 per cent to 1.381 million tonnes while the palm oil production slumped 13.86 per cent to 1.287 million tonnes.
US Department of Agriculture (USDA) released a slightly bearish monthly report on soybean supply and demand on Thursday with soybean ending stocks remained at 275 million bushels from the previous report. The ending stocks figure was slightly above the average market expectation of 273 million bushels.
Most traders expected the soybean supplies would be cut a little bit lower due to yield loss in South American soybean crop caused by prolonged drought in the past few months. The USDA reports disappointed some traders again which prompted them to take profit and pull out some weather risk premium on the grain prices.
Meanwhile, some weather forecast reported dry weather would return to Brazil this coming week and limited rains would be seen the following week. However, widespread rains were expected in Argentina next week which would ease the crop stress concern.
Cargo surveyor ITS released the palm oil export figures for the period of February 1 to 10 on Friday at 342,982 tonnes, a drop of 7.71 per cent while another surveyor SGS at 337,618 tonnes, a decrease of 4.3 per cent from the same period last month.
The Malaysian government finally released the tax-free crude palm oil export quotas to the producers this week after delaying for weeks. This move would be able to push the exports for crude palm oil higher in February. However, the tax-free export quotas of three million tonnes in 2012 was less than the 3.6 million tonnes issued in 2011.
Technical View
The benchmark April contract rebounded this week to hit the resistance level of the downtrend channel. Palm oil prices were seen struggling to push higher after no bullish surprise from the monthly reports released. We would expect the price to drift lower to cover the gap of RM3,085 to RM3,100 this coming week and probably to test the support level of the channel if there is no further news to boost the market up.
Resistance would be pegged at RM3,150 and RM3,270 while support was set at RM3,000.
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.