Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional
Crude Palm Oil Futures (FCPO) ended higher on Friday after three straight sessions of losses.
It showed a turnaround in weekly prices to post its first gain in three weeks.
However, predictions on surging supplies in the coming months kept investors wary.
For the first 25 days of September, Intertek Testing Service (ITS) reported that exports have increased 6.49 per cent to 1.238 million tonnes compared with previous first 25 days of August 2013 at 1.162 million tonnes.
Société Générale de Surveillance (SGS) reported that exports have increased 6.41 per cent to 1.213 million tonnes compared with the first 25 days of August 2013 at 1.140 million tonnes.
Earlier, price traded near its monthly low on Thursday as expectations of increasing tropical oil supply diminished investor’s buying interest.
Analysts believed that palm oil supply could overtake demand as top world producers; Indonesia and Malaysia, head into seasonally higher output cycles which further depressed prices that have been on a losing streak since 2011.
Meanwhile, both Indonesian and Malaysian governments have pledged to boost domestic consumption of palm oil for biodiesel to help bring down stockpiles.
Indonesian Palm Oil Board chairman Derom Bangun said Indonesia’s consumption of its palm oil is expected to rise by 5.9 per cent to nine million tonnes in 2014, fuelled by a mandatory policy to raise palm oil’s proportion in diesel to 10 per cent from 7.5 per cent.
Malaysia said it was looking to push forward the same policy from its current five per cent requirements, but details have not yet been specified.
The Malaysian ringgit weakened this week as the spot price rose above the 3.20 level and closed for the week at 3.226.
Ringgit weakened on dollar-short, covering in a thin trade after reports showed US jobless claims had fallen last week which renewed some expectations that the Federal Reserve may scale back its stimulus soon.
Most emerging Asian currencies were set to see weekly losses as US House of Representatives Republicans on Thursday refused to give in to President Barack Obama’s demand for straightforward bills to run the government beyond September 30 and to increase borrowing authority to avoid a default.
Stronger local currency may curb appetite from overseas buyers.
The new benchmark FCPO December contract settled at RM2,312 per tonne on Friday which was down by 12 points from last Friday at RM2,300.
The trading range for the week was from RM2,267 to RM2,329. Total volume traded for the week amounted to 139,389 contracts which was down 9,598 contracts compared with last Friday’s 148,987 contracts.
The open interest as of Thursday totalled to 157,120 tonnes contracts from 157,644 contracts from previous Thursday, a decrease of 524 contracts.
Technical View
From the chart, price rebounded from the low of the week on Thursday to close above 2,300 level.
Currently, we drew a mini resistance line and should price trade above the resistance line next week, price may trade even higher.
If not, we still project that the price may revisit the consolidation range support line.
For the coming week we pegged our important support levels at 2,270, 2,250 and 2,220 Meanwhile, for our resistance levels, we pegged important ones at 2,350, 2,380, 2,400 and 2,450
Major fundamental news this coming week
ITS and SGS export reports – September 30, 2013 (Monday)
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