Technical Analysis for FCPO, FCPO Daily Chart Source: BursaStation Professional
Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives declined this week due to weak Chinese economic data and slower palm oil exports growth.
The benchmark FCPO July contract fell RM64 or 2.76 per cent to settle at RM2,252 per tonne on Friday from RM2,316 per tonne last Friday. The trading range for the week was from RM2,243 to RM2,327.
Total volume traded for the week amounted to 116,183 contracts, down 10,585 contracts from the previous week. The open interest as at Thursday increased to 164,551 contracts from 155,488 contracts the previous Thursday.
The cargo surveyor Intertek Testing Services (ITS) released the palm oil export figures for the full month of April on Tuesday at 1,305,120 tonnes, a fall of 4.33 per cent while another surveyor SGS at 1,292,371 tonnes, a decline of 5.56 per cent from the same period last month.
The cut in Indonesian crude palm oil export tax for May also increased the worries over the Malaysian exports demand growth in the coming months.
Although there were slowdowns in exports for April, some traders were still optimistic on the exports growth in the coming months in anticipation of improving demand from Muslim countries with approaching festive season in August.
In addition, the current low-yield cycle of oil palms would also provide some underlying support in the near term as analysts estimated the rising exports and lower production would trim the high palm oil stocks level.
However, the latest Chinese economic data released on Thursday signalled slowing growth in its manufacturing activity in April, dampening the hope of stronger recovery on the global economy.
This might affect the demand for commodities in general.
Meanwhile, the wet weather in US currently slowed down the progress of corn plantings. If this wet weather condition continues, it would potentially shift more corn acres to soybean as soybean is a later planted crop.
This would add on to the already large soybean planting intention in its March reports.
Nevertheless, the near term US soybeans were in tight situation currently due to low carryover stocks from last year. This tight soybean stockpiles were supporting the near month prices, sending the cash price basis to record high in recent weeks.
Malaysia will be having the 13th General Election today and the results of the election might give an impact to the price movement of the Malaysian equities as well as commodities next week.
Technical View
The benchmark July contract fell this week amid the slowdown in exports for April.
The selling pressure seemed to lesser approaching the lower range of the price. Some bargain hunting were noticed at the lower price as it was an attractive price to buy given the large discount of palm oil compared to soybean oil prices.
The palm oil prices expected to continue trading in the range of RM2,217 to RM2,335 until there is a price breakout from the current range.
Resistance would be pegged at RM2,335 and RM2,467 while support was set at RM2,217.
Major fundamental news this coming week
Malaysia’s palm oil boards’s monthly supply-demand report on May 10, Malaysian export data for May 1 to 10 by its and SGS on May 10 and USDA’s monthly supply-demand report on May 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.