Technical Analysis for FCPO, FCPO Daily Chart Source: OPF Charting System
Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week higher in anticipation of falling palm oil stocks due to lower production and higher demand.
The benchmark FCPO March contract rose RM85 or 3.53 per cent to close at RM2,494 per tonne on Friday from RM2,409 per tonne last Friday.
The trading range for the week was from RM2,296 to RM2,410.
Total volume traded for the week amounted to 105,600 contracts, down 51,646 contracts from the previous week.
The open interest as at Thursday increased to 166,198 contracts from 159,084 contracts the previous Thursday.
The focus would be placed on monsoon rains in Malaysia starting from January onwards as heavy rains could bring floods to key palm oil producing states.
The Malaysian Meteorological Department started to issue heavy rains warning in some of the states in Malaysia this week.
On the demand side, the shipments for palm oil were also showing improvement in the latest reports released by the cargo surveyors.
Cargo surveyor ITS revealed its palm oil export figures for the period of December 1 to 25 on Wednesday at 1,283,704 tonnes, a marginal increase of 0.54 per cent while another surveyor SGS at 1,293,765 tonnes, a rise of 2.97 per cent from the same period last month.
The growth in exports was mainly contributed by India and the US during the first 25 days of December.
With the implementation of zero per cent export tax for crude palm oil in January by the Malaysian government, this would spark resurgence in palm oil export demand.
Meanwhile, a weather forecaster predicted the weather in Argentina would turn drier in the next two weeks while rains were expected in Brazil in the coming two weeks which are favourable to the key crops producing areas there.
On the economic front, the US government is still working to come out with a solution to avert the fiscal cliff issue.
They will be continuously working on the deal over the weekend and targets to craft the bill by today.
According to a research report, Indonesia plans to hike the minimum wages of up to 49 per cent from next year onwards.
The rate of increase in minimum wages would vary depending on the province of the labour located.
This hike would impact those labour-intensive industries such as manufacturing, plantation and some other selected sectors including palm oil industry.
The new hike would increase the cost of the total palm oil production which will eventually reduce the producers’ profit margin.
The Malaysian market will be closed on Tuesday celebrating New Year of 2013.
Technical View
The benchmark March contract extended its rally this week and stayed firm above EMA 50 support.
The target for this rally would remain at RM2,745 to RM2,820 levels.
The immediate resistance at RM2,615 to RM2,635 will be monitored.
Resistance would be pegged at RM2,615 and RM2,755 while support was set at RM2,430 and RM2,350.
Major fundamental news this coming week
Malaysian export data for December 1 to 31 by ITS and SGS on December 31.
Oriental Pacific Futures (OPF) is a Trading Participant and Clearing Participant of Bursa Malaysia Derivatives. You may reach us 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.