Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional
Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives were choppy this week, supported by strong performance in exports and the weakening ringgit, pressured down later in the week by broad based selling in the global equities and commodities.
The benchmark FCPO September contract settled was unchanged at RM2,439 per tonne on Friday from last Friday. The trading range for the week was from RM2,421 to RM2,491.
Total volume traded for the week amounted to 136,044 contracts, up 14,249 contracts from the previous week. The open interest as at Thursday increased to 175,385 contracts from 169,310 contracts the previous Thursday.
The cargo surveyor ITS released the palm oil export figures for the period of June 1 to 20 on Thursday at 928,810 tonnes, a surge of 16.19 per cent while another surveyor SGS at 916,768 tonnes, an increase of 13.57 per cent from the same period last month.
The demand from top importing countries like European Union countries and China seemed to be picking up for the past 10 days while Pakistan and India saw a strong growth in its palm oil imports approaching the fasting month in July.
Palm oil prices were also supported by the recent weakening ringgit after the Federal Reserve indicated in its latest FOMC meeting on Wednesday that they will start slowing down its monthly asset purchase probably end of this year.
Most investors started to cut down risky assets holdings in their portfolio after the Federal Reserve announcement.
The open burning in some of the hot spot areas in Indonesia has created very unhealthy levels of haze in Singapore, southern part of Malaysia and Indonesia.
The latest crop progress released by US Department of Agriculture (USDA) showed that soybean planting as at June 16 was 85 per cent complete versus 71 per cent the previous week and was catching up with the five years average of 91 per cent complete.
The latest weather forecast in US also signalled that the weather pattern would turn hot and dry in the US Midwest in the coming two weeks which are favourable to crop planting progress.
Some end users are also postponing their soybean delivery at a later date, waiting for more supplies to come after autumn, signalling that there maybe demand rationing happening at the current price level.
The recent preliminary manufacturing data from China was also showing signs of further contracting while some analysts downgraded the annual growth rate for China to 7.4 per cent from the government target at 7.5 per cent in 2013.
Investors will have to pay more attention on the recent global equities movement as any further plunge in the global equities would also give a huge impact to the global commodities.
Technical View
The benchmark September contract rebounded early this week on better exports demand but there were no follow through to buying.
With the latest movement in the global equities, the market sentiment in palm oil prices will be affected even though the palm oil fundamental is improving.
The uptrend channel support will be closely
monitored as any price break below that level will end the current uptrend and accelerate the downside movement of the palm oil prices.
Resistance would be pegged at RM2,476 and RM2,509 while support was set at RM2,436 and RM2,335.
Major fundamental news this coming week
Malaysian export data for June 1 to 25 by ITS and SGS on June 25.
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.