Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional
Crude Palm Oil Futures (FCPO) ended higher on Friday as it was lifted overnight by US soy-oil market.
However, trade was silent yet volatile as investors waited for an industry report on stocks and output volume for the world’s second-largest producer.
Market players and industry analysts expect Malaysia’s palm production to increase sharply in September and October as tropical oil palm trees enter a seasonal cycle that encourages growth of fresh fruit.
For the first 30 days of September, Intertek Testing Service (ITS) reported that export had increased 2.1 per cent to 1,530,292 tonnes compared with the previous first 31 days of August 2013 at 1,498,755 tonnes.
Société Générale de Surveillance (SGS) reported export increased 0.96 per cent to 1,504,803 tonnes compared with the first 31 days of August 2013 at 1,490,557 tonnes.
Throughout the week, price traded was volatile as the market remained quiet due to the lack of participants from Chinese investors as they celebrate China’s National Holiday.
Moreover, price was also affected by the weak performance in soybean oil due to the government shutdown issue in the US as fundamental data could not be retrieved.
However, soybean oil futures managed to rebound due to technical buying which also spurred palm oil market to be choppy into the narrow range.
Malaysian ringgit strengthened this week after it touched the highest level of the week at 3.2720 on Monday as the shutdown of government in the US weakened the dollar which spurred Asian currencies.
Moreover, with the better-than-expected Malaysia trade data, the ringgit strengthened and managed to close below 3.2000 level at 3.1800 for the week. Stronger local currency may curb appetite from overseas buyers.
The new benchmark FCPO December contract settled at RM2,305 per tonne on Friday which was down by seven points from last Friday at RM2,312.
The trading range for the week was from RM2,282 to RM2,334.
Total volume traded for the week amounted to 130,558 contracts which was down 8,831 contracts compared with last Friday’s 139,389 contracts.
The open interest as of Thursday totalled to 157,322 tonnes contracts from 157,120 contracts from previous Thursday, an increase of 202 contracts.
Technical View
From the chart, price traded in a narrow range and we drew the black line to signify how the market rebounded after it touched the line.
Based on our expectations, should the price stay above the drawn black line, we believe market may trade higher in the coming sessions.
However, should the price trade below the 2,330 level, we believe that price may consolidate back to the narrow range or price may revisit the consolidation range support line.
For the coming week, we pegged our important support levels at 2,280, 2,250 and 2,220.
Meanwhile, for our resistance levels, we pegged important ones at 2,330, 2,380, 2,400 and 2,450.
Major fundamental news this coming week
ITS and SGS Export reports – October 10 (Thursday).
MPOB report – October 10 (Thursday).
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.