Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional
Malaysian palm oil futures ended higher on Friday as it reversed some losses in the morning session after the ringgit eased a little, while hopes of only a slight rise in stocks boosted prices which led to its second weekly rise in a row.
Palm oil prices had risen 3.5 per cent in October and posted a weekly gain of about 0.9 per cent which was supported by healthy demand.
The new benchmark FCPO December contract settled at RM2,401 per tonne on Friday which was up by 21 points from last Friday at RM2,380.
The trading range for the week was from RM2,362 to RM2,432. Total volume traded for the week amounted to 136,633 contracts which was down 16,072 contracts compared to last Friday’s 152,705 contracts.
The open interest as of Thursday totalled to 159,373 contracts which is an increase of 2,768 contracts from 156,605 contracts from the previous Thursday.
On Thursday, prices hit their highest in more than five weeks driven by optimistic sentiments on the fact that production in Malaysia, which is the world’s second-largest producer, may not rise as much as expected earlier, which prompted investors to book profits.
Traders stated that the palm market is robust on prospects of a mild growth in production in the month of October, which along with strong demand could keep stocks below two million tonnes in 2013.
It is also believed that output may peak in the month of October although it is expected to be minimal.
For the first 15 days of October, Intertek Testing Service (ITS) reported that exports had increased 6.64 per cent to 781,043 tonnes compared to the previous first 15 days of September 2013 at 732,412 tonnes. Société Générale de Surveillance (SGS) reported that exports had increased 11.77 per cent to 799,853 tonnes compared to the first 15 days of September 2013 at 715,642 tonnes.
Malaysian ringgit strengthened throughout the week especially on Thursday due to weakening dollar as the US reopened its government while raising debt ceiling to avert a potential default crisis which could shake the global financial industry.
However, the ringgit eased on Friday, which also attracted buyers to come back into the market to lift FCPO close higher for the week.
Technical View
From the chart, we still maintain our point of view where should price maintain above the black line we drew from the previous week, FCPO price may still rise in the coming trading sessions, despite the huge profit taking last Thursday.
For the coming week we pegged our important support levels at 2,370, 2,350 and 2,300 Meanwhile, for our resistance levels, we pegged important ones at 2,430, 2,485, and 2,500
Major fundamental news this coming week
ITS & SGS Export reports – October 20 (Wednesday, October 21) ITS & SGS Export reports – October 25 (Friday).
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.