Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional
Palm oil prices have risen four per cent this week as data from India and Malaysia showed improving demand. Meanwhile, a possible shortage of coconut oil from the Philippines due to Typhoon Haiyan lifted prices of palm-based substitutes.
The new benchmark of Crude Palm Oil Futures (FCPO) December contract settled at RM2,613 per tonne on Friday which was up by 105 points from last Friday at RM2,508. The trading range for the week was from RM2,506 to RM2,627. Total volume traded for the week amounted to 177,941 contracts which was up 30,018 contracts compared with last Friday’s 147,923 contracts. The open interest as of Thursday totalled 150,641 contracts from 156,046 contracts from the previous Thursday, a decrease of 5,405 contracts.
Based on the Malaysian Palm Oil Board (MPOB) report, Malaysia’s palm oil stocks at the end of October grew 3.5 per cent to 1,845,312 tonnes against the expectation of 1,820,085 tonnes. Production grew to 1,972,249 tonnes against the expectation of a 1,850,000 tonnes. Exports rose to 1,659,105 tonnes which was above the expectation of 1,600,000 tonnes.
Cargo surveyor Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products from November 1 to 15 fell 4.6 per cent to 744,975 tonnes from 781,043 tonnes shipped during October 1 to 15. Cargo surveyor Societe Generale de Surveillance (SGS) said on Friday that exports of Malaysian palm oil products for November 1 to 15 fell 8.2 per cent to 734,476 tonnes from 799,853 tonnes shipped during October 1 to 15.
India’s palm oil imports rose 21.4 per cent in October from the month before due to robust during the festive season and low domestic supply which boosted purchases. Traders also believed that towards the end of the year China will be purchasing more palm oil to replenish their stocks for the Lunar New Year. The rise in FCPO was also fuelled by fears of the super typhoon Haiyan which caused severe damage to coconut crops in the Philippines and hence, disrupts the coconut oil supply from the world’s biggest exporter. Meanwhile, a government circular showed on Friday that Malaysia has set its crude palm oil export tax for December at five per cent. The rate had been left unchanged at 4.5 per cent since March.
Malaysian ringgit weakened throughout the week till 3.2030 on Friday, but touched the highest of the week at 3.2155. The ringgit weakened as Federal Reserve vice-chair Janet Yellen suggested that the US economy may need a longer stimulus than market expectations indicate.
Technical View
From the chart, buying interest re-enters market and closed above the 2,600 level. We still keep our bullish outlook on the FCPO market with the horizontal line drawn as a huge support level. However, for the price to go further up, we believed it should break and close above the 2,630 level. Another level to be noticed is the 2,565 level, where should it break that level, price may retreat for the time being, towards another strong support level at 2,506 level.
For the coming week we pegged our important support levels at 2,565, 2,500 and 2,485
Meanwhile, for our resistance levels, we pegged important ones at 2,630, 2,700, and 2,750
Major fundamental news this coming week
ITS & SGS Export reports – November 20 (Wednesday)
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.