Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives increased this week due to mostly short covering activities ahead of the long holidays and the improved market sentiment on the eurozone debt crisis.
The benchmark FCPO November contract surged RM80 or 2.78 per cent to close at RM2,962 per tonne on Friday from RM2,882 per tonne last Friday.
The trading range for the week was from RM2,820 to RM2,973.
Total volume traded for the week amounted to 153,897 contracts, up 30,750 contracts from the previous week.
The open interest as at Thursday decreased to 115,338 contracts from 117,109 contracts the previous Thursday.
The palm oil market fell earlier of the week and briefl y broke the major support at RM2,838 level due to the continuous selling from the previous week amid the concern on the high palm oil stocks during the seasonal peak crude palm oil production period.
The improved weather condition in US over the last weekend also prompted profi t taking activities in the US grain markets leading to more selling pressure in the already fragile palm oil market.
The weekly crop progress report released by US Department of Agriculture (USDA) on Monday indicated the soybean crop condition had slight improvement due to the cooler and wetter weather condition.
The soybean crop was reported 30 per cent in good to excellent condition, improving from 29 per cent the previous week.
However, the latest weather forecast indicated the dry and hot weather pattern would return during the late next week after the rainfalls early of the week.
Cargo surveyor ITS released the palm oil export fi gures for the period of August 1 to August 15 on Wednesday at 606,449 tonnes, an increase of 7.6 per cent while another surveyor SGS at 588,749 tonnes, a surge of 10.34 per cent from the same period last month.
The demand from China seemed to be back ahead of the peak demand for the Mid-Autumn Festival at the end of September.
However, the current pace of the export demand as of the fi rst half of August is not strong enough to push palm oil market above RM3,000 per tonne.
More demand is needed to attract the bulls back to the market and the export data released by the cargo surveyors in the coming weeks would remain the main focus.
Meanwhile, the palm oil market during the late week was also lifted by the comment of the German Chancellor Angela Merkel on Thursday saying that the government was committed to do everything it could to maintain the common currency, increasing the investors’ confi dence that the eurozone debt crisis would be solved soon.
The Malaysian market will be closed on Monday and Tuesday celebrating Hari Raya Puasa.
Technical View
The benchmark November contract would be expected not moving much from the current level due to short trading week next week.
The market would face a resistance of RM3,000 to RM3,007 levels and very likely to remain consolidating currently while the traders would be closely monitoring the coming exports data.
Resistance would be pegged at RM3,007 and RM3,067 while support was set at RM2,838.
Major fundamental news this coming week
Malaysian export data for August 1-20 by ITS on August 22, the export data for August 1-25 by ITS, August 1to August 20 and August 1 to August 25 by SGS on August 25.
Oriental Pacific Futures is a Trading Participant and Clearing Participant of Bursa Malaysia Derivatives. They can be reached at www. opf.com.my.
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