Technical Analysis for FCPO – FCPO Daily Chart Source: BursaStation Professional
Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives extended its gain this week in anticipation of weaker palm oil production and hopes for better exports demand in May.
The benchmark FCPO August contract rose RM35 or 1.50 per cent to settle at RM2,371 per tonne on Friday from RM2,336 per tonne last Friday. The trading range for the week was from RM2,321 to RM2,375.
Total volume traded for the week amounted to 138,108 contracts, down 31,035 contracts from the previous week. The open interest as at Wednesday increased to 184,518 contracts from 177,850 contracts the previous Thursday.
Market participants have been hoping for better exports demand in the coming months ahead of the Muslim fasting month in July. However, the exports data did not show any signs of improvement as at the first 20 days of May.
The cargo surveyor Intertek Testing Services (ITS) released the palm oil export figures for the period of May 1 to 20 on Monday at 799,405 tonnes, a fall of 9.41 per cent while another surveyor Societe General de Surveillance (SGS) at 807,232 tonnes, a decrease of 6.59 per cent from the same period last month.
The exports demand from top importing countries like China and India has so far remained sluggish with no signs of improving especially the palm oil stocks in China which were still high.
If the palm oil exports’ pace did not catch up as expected in the coming week, palm oil prices may not be able to sustain long at the current level.
Meanwhile, the crop planting in US had progressed pretty well in the latest week. Farmers were taking advantage of the warm and dry weather to plant as much as they could before rainy weather return for a couple of days.
The US weather seemed improving slightly with a break of warm and dry weather in between, enabling the farmers to proceed with their plantings.
The latest crop progress released by US Department of Agriculture showed that soybean planting as at May 19 was 24 per cent complete versus six per cent the previous week and was still below the five years average of 42 per cent complete.
There is still ample of time to get the soybean planted compared to corn as the soybean is the later planted crop.
The plunge of more than seven per cent in Japan’s stock market just in one day on Thursday also spooked the global markets.
Some analysts commented that the performance of the Japanese market was due to a pull back after a strong gain of more than 50 per cent since the beginning of 2013.
Investors were also reacting negatively as the recent economic data in China was weak and the US Federal Reserve may start slowing down its bond-buying programme as early as June depending on the US economic data.
Technical View
The benchmark August contract Rose AND Broke above EMA50 this week. support and resistance of the uptrend channel will be closely monitored.
Resistance would be pegged at RM2,410 and RM2,467 while support was set at RM2,324 and RM2,217.
Major fundamental news this coming week
Malaysian export data for May 1 to 25 by SGS on May 27 and the export figure for the full month of May by ITS and SGS on May 31.
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.