Malaysian palm oil futures ended 0.7 per cent higher for the week which stretched gains into a third straight daily session after a jump in China’s soy markets as it signalled stronger food and fuel demand for the tropical oil.
The Chinese market re-opened after its five-day Chinese New Year holiday.
The new benchmark futures crude palm oil (FCPO) April contract settled at RM2,578 per tonne on Friday which was up by 19 points from last Thursday at RM2,559. The trading range for the week was from RM2,522 to RM2,590.
On Monday, cargo surveyor Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products from January 1 to 31 fell 11 per cent to 1,275,692 tonnes from 1,433,910 tonnes shipped during December 1 to 31.
Meanwhile, cargo surveyor Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products for January 1 to 31 fell 10.8 per cent to 1,296,266 tonnes from 1,423,644 tonnes shipped during December 1 to 31.
Hot spells over parts of Brazil have sparked fears that the major soy grower will not be able to churn out the bumper harvest earlier than expected while another report showed that the number three soy exporter; Argentina, has cut production estimates for the marketing year of 2013 to 2014 due to crop damage.
Smaller soybean supplies for crushing would boost soyoil prices and potentially shift demand to rival palm oil which is a common substitute.
According to a trader, the market needs new leads as market had been ranging between the 2,500 and 2,600 levels.
Market players will also be watching for official data on January palm oil end-stocks, output volumes and exports in Malaysia which will be released by industry regulator; Malaysian Palm Oil Board, on Monday.
A Reuters survey on Thursday showed that palm oil output last month fell 8.8 per cent from December potentially due trees entering a seasonally slower production cycle.
Meanwhile, end-stocks were seen at 1.98 million tonnes which could be their first drop since June.
Malaysia’s ringgit has strengthened even further to 3.305 against the dollar as there was report of Central Bank intervened the currency market. However, it weakened back to 3.3305.
Analysts stated that the jobs data from the US could prove to be a double-edged sword where a stronger-than-expected report could ensure the US Federal Reserve’s tapering programme continues uninterrupted.
Technical view
From the chart, price tried to retest the 2,520 level again but failed to do so, hence a rebound was stage during the week.
Based on the candlestick formations, price is staged to test the 2,605 level again hence we still draw the resistance line in the chart.
For the coming week we pegged our important support levels at 2,565, 2,520 and 2,485.
Meanwhile, for our resistance levels, we pegged important ones at 2,605, 2,650 and 2,690.
Major fundamental news this coming week
MPOB Report – February 10 (Monday). ITS and SGS Export reports – February 10 (Monday)
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