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 lesser than expected rains coverage in Argentina over the last weekend and the anticipation of better palm oil demand in the coming weeks.
The benchmark FCPO May contract rose RM51 or 2.05 per cent to settle at RM2,534 per tonne on Friday from RM2,483 per tonne last Friday.
The trading range for the week was from RM2,502 to RM2,584.
Total volume traded for the week amounted to 148,107 contracts, up 80,237 contracts from the previous week.
The open interest as at Thursday decreased to 167,287 contracts from 173,562 contracts the previous Thursday.
The rain coverage in Argentina was a bit disappointed over the last weekend as some drier parts in Argentina did not get the beneficial rains.
This news had pushed soybean prices to jump more than three per cent at the beginning of the week.
However, the latest weather forecast reports indicated that there would be another few rounds of beneficial rains in Argentina this coming weekend and later next week.
If the timely rains were able to cover the most needed moisture in some of the soybean planting regions, this would bring relieve to the stressed soybean crops.
Meanwhile, the US Department of Agriculture (USDA) projected that its US soybean stocks would double to 250 million bushels in 2013/14 versus its projection in 2012/13 due to better yield in its recent Agricultural Outlook Forum at Virginia.
The above factors may pressure soybean prices next week with the anticipation of increasing supplies and stocks in the coming months.
On the other hand, the exports demand for palm oil in Malaysia was a bit disappointed as the exports growth in the latest five days for the first 20 days of February showed signs of slowing down.
Cargo surveyor ITS released the palm oil export figures for the period of February 1 to February 20 on Wednesday at 835,612 tonnes, an increase of 0.58 per cent while another surveyor SGS at 811,722 tonnes, a slip of 0.25 per cent from the same period last month.
The growth in exports was mainly contributed by the exports of crude palm oil.
With the implementation of 4.5 per cent export tax for crude palm oil in March, the prospects for March exports would probably much slower.
The only supportive news this week was the increase in export tax for crude palm oil by the Indonesian government from nine per cent to 10.5 per cent for March.
Technical view
The benchmark May contract continued its uptrend this week but was unable to break above the previous high of RM2,593.
Technical indicators were showing the buying momentum was faded and no follow through buying was seen at higher level.
If the price broke below RM2,513, the current uptrend would end and the price would be very likely drive down to the next support at RM2,450.
Resistance is pegged at RM2,590 and RM2,650 while support is set at RM2,513 and RM2,450.
Major fundamental news this coming week
Malaysian export data for February 1 to February 25 by ITS and SGS on February 25 and the export figure for the full month of February by ITS and SGS on February 28.
Oriental Pacific Futures (OPF) is a Trading Participant and Clearing Participant of Bursa Malaysia Derivatives. You may reach us at www.opf.com.my
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