Technical Analysis for FCPO, FCPO Daily Chart Source: OPF Charting System
Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week lower due to improved weather conditions in South America and the increase in Malaysian export tax for crude palm oil.
The benchmark FCPO April contract fell RM77 or 3.01 per cent to settle at RM2,483 per tonne on Friday from RM2,560 per tonne last Friday.
The trading range for the week was from RM2,476 to RM2,558.
Total volume traded for the week amounted to 67,870 contracts, down 70,309 contracts from the previous week.
The open interest as at Thursday decreased to 173,562 contracts from 177,268 contracts the previous Thursday.
Some weather forecast reports indicated that there would be beneficial rains in Argentina over the weekend which would be able to relieve some of the stressed soybean crops.
Wetter condition would also be expected in some of the key soybean planting areas in Brazil the next two weeks.
This had further improved the soybean crops condition in those areas.
The improved weather condition in South America has strengthened the forecasts of bumper crops this year, weighed on soybean prices.
The Malaysian government announced on Friday that its crude palm oil export tax for March would be set at 4.5 per cent, as the average palm oil prices had increased to the taxable price range.
The increase in the export tax for crude palm oil dampened the market sentiment despite strong exports growth in February.
Cargo surveyor ITS released the palm oil export figures for the period of February 1 to 15 on Friday at 673,555 tonnes, an increase of 18.06 per cent while another surveyor SGS at 649,045 tonnes, a rise of 13.57 per cent from the same period last month.
The growth in exports was mainly contributed by the one-fold increase in crude palm oil exports for the first half of February.
The effect of zero-per cent export tax in crude palm oil by the Malaysian government has taken place.
Malaysian Palm Oil Board (MPOB) released its monthly reports on Malaysian palm oil’s supply and demand for January 2013 on Wednesday with palm oil stocks were finally lower at 2.578 million tonnes, a decrease of 1.90 per cent from the previous month and was slightly above the average estimation of Reuters’ poll at 2.55 million tonnes.
According to the report, the exports in January dropped slightly 1.61 per cent to 1.624 million tonnes while the palm oil production reduced 9.98 per cent to 1.602 million tonnes.
Based on the latest exports and production figure, there was slight improvement in palm oil fundamental.
This trend would be expected to extend in February.
Technical View
The benchmark April contract broke the first support at RM2,512 but was still holding above the main support line as shown in the chart.
As long as the main support line is not broken, the target rally to RM2,745 to RM2,820 remained intact.
However, if the main support line is broken, the whole trend for crude palm oil will fall back to the big consolidation phase again.
The benchmark contract will change from April to May month next Monday.
Resistance would be pegged at RM2,615 and RM2,755 while support was set at RM2,470 and RM2,380.
Major fundamental news this coming week
Malaysian export data for February 1 to 20 by ITS and SGS on February 20.
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.