Technical Analysis for FCPO, FCPO Daily Chart Source: OPF Charting System
Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week higher due to concerns on lower South American output and the increasing prospects of Greece securing the second bailout soon.
The benchmark FCPO May contract soared RM111 or 3.55 per cent to close at RM3,242 per tonne on Friday from RM3,131 per tonne last Friday. The trading range for the week was from RM3,152 to RM3,255.
Total volume traded for the week amounted to 131,362 contracts, up 61,349 contracts from the previous week. The open interest as at Thursday increased to 127,987 contracts from 116,457 contracts the previous Thursday.
Dry weather concerns were back in Brazil this week which might hurt the soybean crop yield especially in the southern area. In addition, Argentina’s government estimated its soybean crop in 2011/12 to be lower at 43.5 million to 45 million tonnes compared with USDA forecasts at 48 million tonnes.
However, the latest weather forecast suggested significant rainfalls would occur in most of main crop areas in Argentina over the weekend and would extend into dry areas in southern Brazil which might give relief to the drought-hit crop areas in South America next week.
The US soybean market was also cheered by the news of the agreement signed by the Chinese trade delegates to buy a record amount of 13.42 million tonnes of soybean during an official visit to the US this week.
Cargo surveyor ITS released the palm oil export figures for the period of February 1 to February 15 on Wednesday at 509,107 tonnes, a drop of 14 per cent while another surveyor SGS at 494,298 tonnes, a decrease of 14.16 per cent from the same period last month.
The export pace was much slower for the period of February 1 to February 15 compared with the period of February 1 to February 10.
However, the market sentiment shrugged off this negative factor with the increasing optimism that the exports would recover in the coming weeks after the Malaysian government released the tax-free crude palm oil export quotas last week.
Felda Global Ventures Holdings Bhd, the biggest plantation firm in Malaysia, would be scheduled to launch its initial public offering in the Main Board of Malaysia’s stock exchange on May 10. Felda targeted to raise at least US$1 billion from the issuance of this IPO exercise.
The US markets would be closed on Monday celebrating President’s Day.
Technical View
The benchmark May contract extended its rally this week on technical buying amid the broad gains in both the global commodities and equities.
The persistent buying momentum had successfully broken two major resistance levels this week.
One resistance of the downtrend channel at RM3,150 and the other major resistance of the triangle pattern at RM3,220.
The firm closing for the week might bring palm oil market to the new trading range of RM3,200 to RM3,465 in the coming months as long as the price stayed above the resistance-turned-support triangle line.
Resistance would be pegged at RM3,270 and RM3,465 while support was set at RM3,200 and RM3,085.
Major fundamental news this coming week
Malaysian export data for February 1 to February 20 by ITS and SGS on February 20 and export data for February 1 to February 25 by ITS on February 25.
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.