Technical Analysis for FCPO, FCPO Daily Chart Source: OPF Charting System
Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives settled the week higher, anticipating better exports demand and lower production for palm oil in the coming months.
The benchmark FCPO June contract rose RM79 or 3.27 per cent to settle at RM2,493 per tonne on Friday from RM2,414 per tonne last Friday. The trading range for the week was from RM2,383 to RM2,503.
Total volume traded for the week amounted to 194,413 contracts, up 21,409 contracts from the previous week. The open interest as at Thursday increased to 169,633 contracts from 162,374 contracts the previous Thursday.
The exports demand for March would be expected to be much better than the February month as the latest cargo surveyors’ reports showing the current exports growth were improving.
The cargo surveyor ITS released the palm oil export figures for the period of March 1 to March 20 on Wednesday at 927,665 tonnes, an increase of 11.02 per cent while another surveyor SGS at 922,987 tonnes, a rise of 13.71 per cent from the same period last month.
China remained the top palm oil importer and the major contributor to the exports growth in March.
The well-known global analyst, Dorab Mistry, presented his paper during an industry conference in Beijing on Friday, revising his earlier price forecast made during the annual palm oil conference in Kuala Lumpur early this month.
Mistry in its latest price projection was leaning to the bullish side with the anticipation of much lower palm oil production this coming few months due to the drop in palm oil yield.
He raised the range of palm oil prices to RM2,400 to RM2,700 per tonne by end of May versus the earlier forecast of RM2,300 to RM2,500 by end of April.
He added that the Malaysian palm oil stocks would fall below two million tonnes in June 2013 while the Indonesian stocks would reduce to below four million tonnes.
In addition, Mistry said that the weaker ringgit could also underpin the palm oil prices as the weaker ringgit made palm oil less expensive to the overseas buyers.
In US, the industry players would be waiting for the Prospective Plantings and Grain Stocks reports to be released by the US Department of Agriculture on March 28, 2013 to get the indication on the soybean fundamental and its impact on the price movements of soybean complex thereafter.
Meanwhile, traders would also closely monitor the progress of the Cyprus bailout plan next week as to see if it would trigger another round of financial meltdown.
Technical view
The benchmark june contract rose this week after the palm oil prices successfully crossing above RM2,415 and RM2,476 respectively.
Short covering and technical buying activities pushed palm oil prices further up once the resistance levels were broken.
Palm oil prices would be expected to cover the big gap left behind on February 25 but may face strong resistance at RM2,580 level should the price further rally.
If the palm oil prices are strong enough to break above RM2,580 this coming few months, then the palm oil prices have broken out from the current big consolidation range resulting the prices may further rally for another RM300 to RM400 per tonne.
Resistance would be pegged at RM2,527 and RM2,580 while support was set at RM2,467 and RM2,415.
Major fundamental news this coming week
Malaysian export data for March 1 to March 25 by ITS and SGS on March 25 and Prospective Plantings by USDA on March 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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