Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional
Malaysian palm oil futures hit a fresh one-year high on Friday, as strong Asian demand coupled with lower production expectations boosted prices for the fifth consecutive session. According to traders and analysts, both Malaysia and Indonesia are entering their monsoon weather season where their output are likely to be decreased by a lower production cycle as yields have eased from last year.
The new benchmark FCPO December contract settled at RM2,628 per tonne on Friday which was up by 184 points from last Friday at RM2,444. The trading range for the week was from RM2,426 to RM2,632. Total volume traded for the week amounted to 209,040 contracts which was up 38,582 contracts compare to last Friday’s 170,458 contracts. The open interest as of Thursday totalled 150,726 contracts from 155,478 contracts from previous Thursday, a decrease of 4,752 contracts.
For the first 31 days of October, Intertek Testing Service (ITS) reported that exports had decreased 0.55 per cent to 1,521,928 tonnes compared with the previous first 31 days of September 2013 at 1,530,292 tonnes. Société Générale de Surveillance (SGS) reported that exports had increased 2.87 per cent to 1,548,063 tonnes compared with the first 31 days of September 2013 at 1,504,803 tonnes.
FCPO went up to as high as 2,632 on Friday, which was also its strongest gain since December 2010. Market seems to be holding well as buyers refuse to let sellers set the pace throughout the week due to supportive fundamental factors such as the possible limited production due to the monsoon weather and also strengthening demand from both Chinese and Indian buyers as festivals are coming soon. Moreover, with the new biodiesel mandate from both Indonesia and Malaysia, palm oil price seems sustainable. According to another analyst, the new cap of plantation area by new firms in Indonesia also likely to support FCPO price from falling.
Malaysian ringgit weakened till 3.17 on Friday as the Federal Reserve from the US was still uncertain about its tapering programme. Ringgit did strengthen till 3.122 on Monday but throughout the week, ringgit weakened as the uncertainty from the Feds prompted traders to take a cautious stance. Normally, a weaker ringgit will increase demand from foreign buyers as they have to pay lesser to purchase palm oil.
Technical View
As we mentioned previously, should the price break the formation which we drew in the chart (inverted head and shoulder), price may enter a bullish stage. currently, we believe there is more room for prices to go up. there is also a possibility for traders to initiate profit taking activity but we believe such fall in price could be temporary as buyers may gather their positions through the profit taking activity which may form a strong support to push fcpo price higher.
For the coming week we pegged our important support levels at 2,580, 2,550, 2,500 and 2,385
meanwhile, for our resistance levels, we pegged important ones at 2,650, 2,700, and 2,800
major fundamental news this coming week
ITS & SGS Export reports – November 10 (Monday, November 11)
MPOB report – November 10 (Monday, November 11)
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