Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional
Oriental Pacific Futures Malaysian palm oil futures (FCPO) slipped to a near two-week low on Friday due to a series of technical selling which pressured prices.
However, the market was range-bound ahead of a key industry report on production and stocks in the world’s No.2 producer.
The new benchmark FCPO December contract settled at RM2,508 per tonne on Friday which was down by 120 points from last Friday at RM2,628.
The trading range for the week was from RM2,623 to RM2,506.
Total volume traded for the week amounted to 147,926 contracts which was down 61,114 contracts compared with last Friday’s 209,040 contracts.
The open interest as of Thursday totalled to 156,046 contracts from 150,726 contracts from the previous Thursday; an increase of 5,320 contracts.
The sharp rise in the palm market last Friday prompted a round of profit-taking which stretched losses through four consecutive days and dragged prices to post their biggest weekly loss since early March.
Market players are waiting for official data on Malaysia’s October palm oil stocks, exports and output that will be released soon by Malaysian Palm Oil Board (MPOB).
A Reuters survey on Thursday showed that Malaysian palm oil stocks potentially inched up to 1.82 million tonnes in October, as the increase in inventories was seen as limited due to the seasonally high-cycle which has begun to wane and monsoon rains which reduces production.
Investors will also be keeping a watch on export data for the first 10 days of November, which will also be released soon, to gauge demand for the tropical oil especially from major buyer; China.
Traders believe Chinese buyers could start re-stocking palm oil ahead of its spring festival celebrated early next year.
Malaysian ringgit weakened slightly throughout the week till 3.1775 on Friday.
Normally, a weaker ringgit will increase demand from foreign buyers as they have to pay lesser to purchase palm oil.
Technical View
From the chart, a correction took place since last Friday.
However, as mentioned from the previous week commentary, we still believe such fall or correction will gather buying interest for buyers to accumulate their buying position or to form a strong support level to push price further in the future.
Currently, we still keep our bullish outlook on the FCPO market.
For the coming week we pegged our important support levels at 2,500, 2,485, 2,400 and 2,370 Meanwhile, for our resistance levels, we pegged important ones at 2,630, 2,690, and 2,750.
Major fundamental news this coming week
ITS & SGS Export reports – November 10 (Monday, November 11) MPOB report – November 10 (Monday, November 11)
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.