Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional
Malaysian palm oil futures rose 1.6 per cent for the week on Friday as it rebounded from Thursday’s losses.
Traders are banking on a bullish global oilseeds outlook in a key industry meet next week.
Meanwhile, concerns over dry weather, which would hinder output, had lifted benchmark prices to their biggest monthly gain since October 2013.
Price settled at 2,800 compared to last Friday at 2,755 while volume increased to 214,190 contracts compared to last week at 212,382 contracts.
Open interests dropped to 178,066 contracts compared to last week at 191,561 contracts.
On Friday, Cargo Surveyor Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products from February 1 to 28 were down 2.5 per cent to 1,244,101 tonnes from 1,275,692 tonnes shipped during January 1 to 31.
Meanwhile, Cargo surveyor Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products for February 1 to 28 had dropped 2.1 per cent to 1,242,066 tonnes from 1,269,266 tonnes shipped during January 1 to 31.
Market participants are keeping watch for price outlooks from key industry speakers at the Palm Oil Conference that will run from March 3 to 5 in capital Kuala Lumpur.
Fears over unfavourable weather tightening palm supplies have sustain price near a 17-month high this week which lifted future crude palm oil (FCPO) price to as high as 2,818.
Dry weather over the past months in Indonesia and Malaysia has added to global concerns over edible oil supplies while lack of rain has also affected soybean production in Brazil.
The state government said on Tuesday that Brazil’s No.2 soy growing state; Parana, lost some two million tonnes of soybeans to drought and hot weather in January and February.
Reuter’s poll showed that palm oil prices are poised to climb 14 per cent in 2014 to average at RM2,700 as robust demand from the biofuel industry might take up supplies from major producing countries although this might eat into palm’s discount to competing edible oils.
Technical view
From the chart, we drew two support levels to be observed where the first line will be 2,777 as price had a strong break upward through this level which can be seen in the one hour chart.
The second line will be 2,720 where price found strong support level as it was unable to break this level.
Currently, we still maintain our bullish view which may continue further in the coming weeks and months although we do believe a pullback is also necessary.
However, such pullback is considered a healthy correction considering the bullish FCPO trend which has been riding for the past weeks and months.
For the coming week we pegged our important support levels at 2,777-60, 2,720 and 2,690.
Meanwhile, for our resistance levels, we pegged important ones at 2,820, 2,850 and 2,900.
Major fundamental news this coming week
Palm oil conference (March 3 to 5, 2014). MPOB – March 10, 2014. ITS and SGS Export reports – March 10, 2014.
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