Crude Palm Oil Weekly Report 1 September 2013

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Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional

Crude Palm Oil Futures (FCPO) rose again for the week but pulled back gains and fell on Thursday and Friday.

The week’s rally was fuelled by forecasts of dry weather in the soy-producing US Midwest, healthy demand, and a still-weak ringgit.

FCPO price went up to 2,485 before it closed for the week at 2,404.

Palm oil is normally used as substitute for soybean oil.

Malaysian palm oil futures rose to the highest in more than two months on Wednesday, as worries persisted over dry weather in the US.

Midwest which could lead to lower soybean yields.

According to a trader with a foreign commodities brokerage in Kuala Lumpur, weather related issue lent strength to the palm market and also the expectation that export should be higher compared with the previous month.

Rising palm exports and potentially lower output in Malaysia, the world’s No.2 palm producer, could help ease end-August stocks.

For the first 25 days of August, cargo surveyor Intertek Testing Service (ITS) reported export had increased 7.14 per cent to 1,162,884 tonnes compare with the previous first 25 days of July 2013 at 1,085,392 tonnes.

Meanwhile, Société Générale de Surveillance (SGS) reported export increased 7.55 per cent to 1,140,460 compare to first 25 days of July 2013 at 1,060,421 tonnes.

The US dollar went higher as the highest spot rate as of Wednesday was recorded at 3.3345.

However, the ringgit strengthened on Thursday and Friday as the prospect of the attack on Syria diminished for the time being.

As of Friday, the spot rate closed at 3.2850.

The strengthening in ringgit could also be the reason why palm fell on both Thursday and Friday as traders booked profit after it went to the highest of the week on Wednesday.

The new benchmark FCPO November contract settled RM2,404 per tonne on Friday which was up 37 points from last Friday at RM 2,367.

The trading range for the week was from RM 2,396 to RM 2,485.

Total volume traded for the week amounted to 211,882 contracts up 16,286 contracts compared with last Friday’s 195,596 contracts.

The open interest as of Thursday totalled to 167,561 contracts from 174,967 contracts from previous Thursday, a decrease of 7,406 contracts.

Technical View

Just like the previous week, price continued to rise above the support line which we drew in the chart.

Currently, we will still maintain our previous week’s view where we believe should the market maintain its mini-uptrend for the time being, it should 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 2,380, 2,360 and 2,300.

Meanwhile, for our resistance levels, we pegged important ones at 2,480, 2,500 and 2,250.

Major fundamental news this coming week

Malaysian export data for August 1 to 31 by ITS and SGS on September 2 (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.