Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional
Crude palm oil futures (FCPO) rose to the highest for the week as it posted a 2.6 per cent weekly gain due to planters estimating output or production might fall in August which could lead to tightening in stocks level.
Traders said figures from the Malaysian Palm Oil Association (MPOA) showed that production in August 1 to 20 had dropped 7.4 per cent compared with July. The data was confirmed by MPOA itself.
For the first 20 days of August, cargo surveyor Intertek Testing Service (ITS) reported export had increased 10.3 per cent to 880,979 tonnes compare to previous first 20 days of July 2013 at 798,482 tonnes. Société Générale de Surveillance (SGS) reported export increased 12.28 per cent to 891,582 compare to first 20 days of July 2013 at 794,081 tonnes.
US dollar went above 3.3000 during the week where the highest spot rate as of Thursday was recorded at 3.3225.
A higher greenback against the ringgit normally makes the palm cheaper for overseas buyers and refiners. It also improved margins for overseas buyers.
Price did trade lower earlier as investors were cautious that there may be a potential for ringgit to strengthen.
The US dollar strengthened drastically over a few months as the prospects from the Federal Reserves to taper the third quantitative easing was slated to take place by the end of the year should US economy show improvements.
This had caused the US dollar to become the current safe haven for most investors.
Meanwhile, Indonesia reduced their export tax to nine per cent for the month of September from 10.5 per cent in August.
This could pressure FCPO price as this may cut into demand for Malaysian exports, especially from the second-largest palm oil buyer China as it stocks up ahead of its Mid-Autumn festival in September.
The new benchmark FCPO November contract settled RM2,367 per tonne on Friday which was up 58 points from last Friday at RM2,309.
The trading range for the week was from RM2,315 to RM2,369.
Total volume traded for the week amounted to 195,596 contracts up 11,800 contracts compare to last Friday’s 183,796 contracts.
The open interest as of Thursday decreased 16,553 contracts to 174,967 contracts from 191,520 contracts from previous Thursday.
Technical View
From the chart, price continued to rise above the support line which we drew in the chart. At this point, we still maintain our previous week’s view in which we believed that should the market maintain its mini-uptrend for the time being, it would likely be above the blue support line.
Any violation below that line, market may revisit the consolidation range support line (black).
For the coming week we pegged our important support levels at 2,320, 2,300 and 2,250.
Meanwhile, for our resistance levels, we pegged important ones at 2,380, 2,400 and 2,450.
Major fundamental news this coming week
Malaysian export data for August 1 to 25 by ITS and SGS on Augusts 26 (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.