Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional
Malaysian palm oil futures rose 3.4 per cent for the week and a 17-month high after Friday’s closing which stretched gains into for the third straight week due to strong export data and concerns of dry weather which potentially squeeze supplies.
The new benchmark futures crude palm oil (FCPO) May 2014 contract settled at RM2,755 per tonne on Friday which was up by 90 points from last Friday at RM2,665. The trading range for the week was from RM2,646 to RM2,758.
Volume for the week rose to 212,382 contracts versus 195,231 last week while open interest based on Thursday, rose to 191,561 contracts versus 185,902 contracts last Thursday. On Monday, Cargo Surveyor Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products from February 1 to 15 rose 31.7 per cent to 606,190 tonnes from 460,248 tonnes shipped during January 1 to 15.
Meanwhile, Cargo surveyor Societe Generale de Surveillance (SGS) reported exports of Malaysian palm oil products for February 1 to 15 rose 27.2 per cent to 595,125 tonnes from 467,817 tonnes shipped during January 1 to 15.
Meanwhile, on Thursday, cargo surveyor ITS reported that exports of Malaysian palm oil products from February 1 to 20 rose 16.9 per cent to 875,091 tonnes from 748,303 tonnes shipped during January 1 to 20.
Meanwhile, SGS reported exports of Malaysian palm oil products for February 1 to 20 rose 16.7 per cent to 867,901 tonnes from 743,487 tonnes shipped during January 1 to 20.
Market participants said the dry conditions in parts of Malaysia have hindered the growth of fresh fruit bunches on oil palm trees which may lead to a sharp drop in output this month.
Traders stated that the tropical plant typically needed ample sunshine and water to flourish, and yields could fall even further in the next few months if the weather persists to be inconsistent.
US soybeans futures were up more than one per cent for the week which is the third straight weekly gain as it was underpinned by concerns about weather in Brazil, where dry conditions were seen limiting crop production in north-eastern states while rainy weather in other areas were slowing harvest.
Malaysia’s ringgit traded side-ways throughout the week, biased towards strengthening against the dollar amid growing talk that Beijing may widen the currency’s trading band.
Some analysts are concerned that emerging Asian currencies are likely to become more volatile should China widen the yuan’s trading band as regional currencies tend to follow the Chinese unit.
Regional units might come under further pressure if the People’s Bank of China continues to fix the yuan’s midpoint weaker amid concerns over the world’s second-largest economy.
Technical view
From the chart, price managed to break about our 2,690 level our previous resistance line and it went to up as high as 2,758 which fully covered the gap since September 21 to 24, 2012.
However, such pullback is considered a healthy correction considering the bullish trend FCPO had been riding on for the past months.
We also drew moving average 100-day (black) and 200-day (red) to show how the bullish momentum had built up over the weeks.
Another good insight to take note of is the daily candlestick on January 13, 2014 (low at 2,486) touched the 200 day moving average but was unable to break even lower than that.
Same goes to candlesticks on January 28, 2014 (low at 2,519) and February 4, 2014 (low at 2,522) touched the 100-day moving averages but was unable to break even lower.
For the coming week we pegged our important support levels at 2,715, 2,695 and 2,600.
Meanwhile, for our resistance levels, we pegged important ones at 2,780, 2,800 and 2,900.
Major fundamental news this coming week
ITS and SGS Export reports – February 25 (Tuesday) and February 28 (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.