Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional
Crude Palm Oil Futures (FCPO) on Bursa Malaysia Derivatives closed below the consolidation range again after it managed to rebound last week.
FCPO price would most likely follow in tandem with the fall in soybean oil futures prices while traders unwind their positions ahead of the Hari Raya holidays.
Apart from that, FCPO price dropped to their lowest in more than a week on Wednesday due to market talk that production growth in Malaysia was significantly higher last month which stoked concerns about a potential build up in stocks.
There was also rumour that a group of planters forecast output would rise 19 per cent to 1.68 million in July instead of 10 per cent, according to Reuters Poll.
Additionally, Reuters Poll showed that inventory might have dropped three per cent to 1.6 million compare with the previous month at 1.65 million.
However, production may likely rise 10 per cent to 1.56 million. The rise represents the kick-start of the higher production cycle in the second half of the year.
Exports are likely to rise three per cent to 1.45 million.
Indonesia which is the top palm oil producer, kept its crude palm oil export tax unchanged at 10.5 per cent for August while Malaysia also left its export tariff unchanged for the sixth straight month at 4.5 per cent.
Meanwhile, the US dollar still went higher throughout the week until Wednesday, where the spot rate as of Wednesday was recorded at 3.2530.
A higher greenback against the ringgit normally makes the palm cheaper for overseas buyers and refiners.
This could be one of the major factors for the rise in exports and could possibly set the tone for the upcoming export reports as crude palm oil (CPO) price is considered cheap for foreign buyers to purchase especially with the weak ringgit.
The benchmark FCPO October contract settled RM2,207 per tonne on Wednesday which was down 50 points from last Friday at RM2,257.
The trading range for the week was from RM2,262 to RM2,201.
Total volume traded for the week amounted to 60,965 down 125,477 contracts compare with last Friday’s 186,442 contracts.
The open interest as of Tuesday decreased 3,961 contracts to 183,485 contracts from 187,446 contracts from previous Thursday.
Technical view
From the chart, price fell back below the consolidation range support line after it managed to rebound back above last week.
For the time being, we will maintain the support line as our main technical analysis to determine the direction as the market waits for both Malaysian Palm Oil Board (MPOB) and exports data from both cargo surveyors ITS and SGS.
For the coming week, we pegged our important support levels at 2,200, 2,180, 2,137, and 2,100.
Meanwhile, for our resistance levels, we pegged important ones at 2,260, 2,285 and 2,300.
Major fundamental news this coming week
Malaysian MPOB Data for July on August 12 (Monday) Malaysian export data for June 1 to 30 by ITS and SGS on Augusts 12 (Monday).
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.