Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week slightly lower due to weaker demand and concerns over euro-zone debt crisis.
The benchmark FCPO July contract slipped RM10 or 0.28 per cent to close at RM3,500 per tonne on Friday from RM3,510 per tonne last Friday.
The trading range for the week was from RM3,439 to RM3,509.
Total volume traded for the week amounted to 149,633 contracts, up 38,242 contracts from the previous week.
The open interest as at Thursday decreased to 116,476 contracts from 120,575 contracts the previous Thursday.
Cargo surveyor ITS released the palm oil export figures for the period of April 1 to 15 on Monday at 594,798 tonnes, a drop of 14.76 per cent while another surveyor SGS at 606,804 tonnes, a decline of 13.5 per cent from the same period last month.
The unexpected extremely weak export data painted a bearish view to palm oil market throughout the whole week which was totally opposite from the increase in export demand during the first 10 days of April.
However, the exports demand pace recovered again as seen in the export data for the first 20 days in April.
Cargo surveyor ITS released the palm oil export figures for the period of April 1 to 20 on Friday at 844,453 tonnes, a fall of 5.6 per cent while another surveyor SGS at 839,829 tonnes, a dip of 5.29 per cent from the same period last month.
The slowdown in export demand during the first 15 days in April signalled that the palm oil prices were rising too fast and rationed some demand at higher prices.
Hence, it was good that palm oil prices retraced lower to attract the buyers back to the market again.
The eurozone debt crisis fears were eased after Spain had successfully sold out its long term bonds and short term bills on Tuesday and Thursday with good demand but at higher yields.
Meanwhile, the business and investor confidence in German was unexpectedly increased to a nine-month high as shown in the business climate index released by Ifo Institute on Friday.
This showed that the investors remained confident in the Europe’s largest economy despite the resurgence of the issues on the eurozone debt from time to time.
The bullishness in palm oil market would temporary slowdown until the export demand gathered more momentum again.
The production in April would be monitored closely as to determine the palm oil stock level and the supply situation in the coming months.
External factors such as the crop progress in US and the development of the eurozone debt situation would be continuously monitored from time to time.
Technical View
The benchmark July contract was consolidating this week after the sharp fall in the previous week.
The market was strongly supported at RM3,445 to RM3,465 levels this week with a brief dip to RM3,439 on Thursday.
We believe the market would continue with the current consolidation phase for some time with minor resistance at RM3,532 before the market started to move again.
Resistance would be pegged at RM3,700 to RM3,735 while support was set at RM3,445 to RM3,465.
Major fundamental news this coming week
Malaysian export data for April 1 to April 25 by ITS and SGS on April 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.