Technical Analysis for FCPO, FCPO Daily Chart Source: OPF Charting System
Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives settled the week lower in tandem with the fall in soybean oil prices and the pressure from the advancing harvest in South America.
The benchmark FCPO May contract dipped RM34 or 1.39 per cent to settle at RM2,414 per tonne on Friday from RM2,448 per tonne last Friday.
The trading range for the week was from RM2,360 to RM2,467.
Total volume traded for the week amounted to 173,004 contracts, up 37,236 contracts from the previous week.
The open interest as at Thursday decreased to 162,374 contracts from 167,859 contracts the previous Thursday.
Soybean prices were under pressure with the anticipation of higher supplies from South America to meet the exports demand soon.
In addition, some analysts projected the US farmers would plant a record of soybean crops this coming crop year.
The industry players would be waiting for the Prospective Plantings report to be released by the US Department of Agriculture end of this month to get the farmers’ intention on the crop plantings this year.
The Malaysian Palm Oil Board released its monthly reports on Malaysian palm oil’s supply and demand for February 2013 on Monday with palm oil stocks continued to be lower for the consecutive two months at 2.444 million tonnes, a decrease of 5.23 per cent from the previous month and was slightly above the average estimation of Reuter’s poll at 2.42 million tonnes.
According to the report, the exports in February fell 13.98 per cent to 1.398 million tonnes while the palm oil production reduced 19.15 per cent to 1.296 million tonnes.
The palm oil production would be expected to be in dismal as the oil palm had entered a low yield cycle currently.
Meanwhile, the cargo surveyor ITS released the palm oil export figures for the period of March 1 to 15 on Friday at 675,210 tonnes, an increase of 0.25 per cent while another surveyor SGS at 678,829 tonnes, a rise of 4.59 per cent from the same period last month.
The exports demand seemed to be able to maintain its current pace although there was a 4.5 per cent export tax implemented on crude palm oil in March.
Noticeably, China has come back to purchase the palm oil as shown in its 30 per cent increase in tonnage from the same period last month.
The exports of refined, bleached and deodorised palm olein had increased substantially and were more than enough to offset the fall in crude palm oil exports during the first half of March.
The drastic drop of nearly 56 per cent in crude palm oil exports was reasonable as the impact from the implementation of the 4.5 per cent export tax on crude palm oil this month.
The Malaysian government also announced on Friday that the crude palm oil export tax for April would be maintained at 4.5 per cent.
Technical View
The benchmark May contract dipped this week following the movement of soybean oil prices.
The palm oil prices were mainly trapped in a very tight range of about RM100 per tonne.
Palm oil prices are currently trading in sideway market with no significant major trend until there is a major breakout from the current range.
Resistance would be pegged at RM2,476 and RM2,527 while support was set at RM2,360 and RM2,332.
Major fundamental news this coming week
Malaysian export data for March 1 to 20 by ITS and SGS on March 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
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