Malaysian crude palm oil prices continued to go lower on Friday.
FCPO benchmark for October 2014 contract settled at 2,093, down 140 points or 6.26 per cent from 2,233 last Friday.
Trading volume increased to 214,280 contracts from 133,225 contracts totalled last week.
On the other hand, open interest based on Thursday increased to 975461 contracts from 229465 contracts last Thursday.
On Monday, Societe Generale de Surveillance (SGS) reported a drop of 19.6 per cent in exports of Malaysian palm oil products from August 1 to 10 to 355,874 tonnes from 442,640 tonnes during July 1 to 10. European Union (EU) and India continued to register strong import figures, however the US and China reported a drop in imports.
Intertek Testing Services (ITS) on Monday, reported that exports of Malaysian palm oil products for August 1 to 10 fell by 22.2 per cent to 347,094 tonnes from 445,968 tonnes for July 1 to 10. EU and China’s level of imports dropped dramatically while India still holds a strong level of imports.
SGS reported on Friday a drop of 15.9 per cent or 549,784 tonnes during August 1 to 15 from 653,675 tonnes from July 1 to 15.
EU and China’s imports decreased, while India and US imports saw increased.
ITS reported on Friday, that exports of Malaysian palm oil products during August 1 to 15 decreased by 15.2 per cent to 570,761 tonnes from 673,463 tonnes during July 1 to 15.
India continued to report figures showing strong imports of crude palm oil (CPO), while the EU and China level of imports decreased.
On the whole, spot ringgit continued to strengthen this year appreciating 3.6 per cent against the US dollar, reported by Reuters.
Reuters reported on Monday that geopolitical tensions in Ukraine and Israel had eased which led to the strengthening of various Asian currencies, the yuan hit a five-month high on Monday, and the ringgit edged slightly higher as data showed industrial output in June rose more than expected.
On Tuesday, Reuters reported that the ringgit climbed on bond inflows as investors bought it against the Singaporean dollar.
Reuters reported on Thursday, the ringgit edged up 0.6 per cent to 3.1745, the highest level since the July 25, due to easing geopolitical tensions.
However, there could be potential involvement by the central bank to reduce the rate of appreciation.
Reuters, on Friday, reported that the ringgit had strengthened to 3.158, the highest level in 10 months after data released showed gross domestic product (GDP) for the second quarter increased to 6.4 per cent, due to increases in exports, domestic demand, and moderating levels of household debt, which had led to the increase in expectations that the central bank will raise its interest rates.
Overall, spot ringgit weakened to 3.153 from the lowest point at 3.2015 against the US dollar last week, as better than expected GDP data and easing geopolitical unrest led to gains for the ringgit.
According to a report by the US Department of Agriculture (USDA), soybean production would reach a new record, and could lead to stocks tripling by 2014 to 2015.
Last week FCPO prices ranged between 2,240 and 2,085 from Monday to Friday.
The price broke 2,200 on Monday, 2,150 on Thursday, and 2,100 on Friday, mainly due to strengthening ringgit as positive news such as positive economic data and easing tensions in Ukraine and Israel.
Technical analysis
Based on the daily chart, the price broke our previous week support levels at 2,200 and 2,210, as the bearish trend continues.
On the weekly chart, a long bearish candle stick has been formed, and was unable to close above 2,100.
Since the price stayed below 2,100, there is a potential for the price to test the support levels at 2,090 and 2,050.
These will be placed under observation, while resistance lines will be placed at 2,120 and 2,150.
Fundamental analysis
SGS and ITS report released on August 20.
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