Technical Analysis for FCPO, FCPO Daily Chart Source: OPF Charting System
Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives dipped this week, tracking the fall in soybean oil prices and concerns over the bird flu outbreak in China.
The benchmark FCPO June contract slipped RM19 or 0.80 per cent to settle at RM2,359 per tonne on Friday from RM2,378 per tonne last Friday.
The trading range for the week was from RM2,335 to RM2,397.
Total volume traded for the week amounted to 144,152 contracts, down 13,654 contracts from the previous week.
The open interest as at Thursday decreased to 148,282 contracts from 164,064 contracts the previous Thursday. The palm oil market was lacklustre this week and the prices were mostly traded within RM30 range of RM2,350 to RM2,380.
The total market volume for the week dropped, while there were more than 15,000 contracts closed out during the week as reflected in the sharp fall in the latest open interest figure.
Some traders closed out their positions and stayed side-lines ahead of the key industry reports to be released next Wednesday.
Reuter’s poll revealed on Friday that the palm oil stocks might probably reduce 3.8 per cent to 2.35 million tonnes in March based on the survey of five plantation companies.
Meanwhile, the palm oil production was expected to fall 1.2 per cent to 1.28 million tonnes due to low yield cycle while the exports might likely drop four per cent to 1.34 million tonnes because of lower crude palm oil shipments.
However, the latest cargo surveyors’ reports showed that there was improvement in the exports demand for March.
The cargo surveyor Intertel Testing Service (ITS) released the palm oil export figures for the full month of March on Monday at 1,364,120 tonnes, a rise of 2.84 per cent while another surveyor, SGS, showed exports of 1,368,426 tonnes, an increase of 5.48 per cent from the same period last month.
The major contributor for the increase in exports in March was coming from China with over 60 per cent increase in its shipments during the month compared to the previous month.
However, the soybean prices were under heavy selling pressure this week due to a follow through technical selling and long liquidation driven by the bearish US Grain Stocks report earlier.
In addition, the increase worries on the bird flu outbreak in China also contributed the fall in soybean prices which could reduce the demand in feeds.
The latest news reported there were six person confirmed dead from this new strain of bird flu in China, putting more pressure on the Chinese government to escalate their response on this issue as soon as possible.
Technical View
The benchmark June contract was consolidating this week and some traders were cautious ahead of key fundamental reports and preferred to stay on the side-lines.
This week’s palm oil price movement showed that the market was directionless while waiting for the fundamental reports next week to gauge on the next price movement.
The benchmark level of RM2,360 will continue to be monitored to determine if the palm oil prices could be supported at this level.
Any price break below RM2,335 would attract more technical selling and long liquidation in the market.
Resistance would be pegged at RM2,467 and RM2,580 while support were set at RM2,335 and RM2,217.
Major fundamental news this coming week
MPOB’s monthly supply-demand report on April 10, Malaysian export data for April 1 to 10 by ITS and SGS on April 10 and USDA’s monthly supply-demand report on April 10.
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.