Crude Palm Oil Weekly Report 12 January 2014

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Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional

Malaysian palm oil futures ended lower on Friday as it hit a two-month low while it stretched losses into a seventh day as it followed reports that exports had plunged in early January which elevate fears that palm oil stocks may increase.

The new benchmark crude palm oil futures (FCPO) December contract settled at RM2,517 per tonne on Friday which was down by 123 points from last Friday at RM2,640.

The trading range for the week was from RM2,629 to RM2,511. Total volume traded for the week amounted to 202,908 contracts which increased by 136,912 contracts compare to last Friday’s 65,996 contracts.

The open interest as of Thursday totalled 162,832 contracts from 153,085 contracts from previous Thursday, an increase of 9,747 contracts.

Cargo surveyor Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products from January 1 to 10 fell 21.5 per cent to 284,693 tonnes from 366,898 tonnes shipped during December 1 to 10.

Cargo surveyor Societe Generale de Surveillance (SGS) said on Friday that exports of Malaysian palm oil products for January 1 to 10 fell 22.4 per cent to 297,308 tonnes from 378,579 tonnes shipped during December 1 to 10.

According to the recent Malaysian Palm Oil Board (MPOB) report, production fell 10.4 per cent to 1,667,003 tonnes compared to November 2013’s production at 1,861,084 tonnes.

Meanwhile, stocks increased 0.3 per cent to 1,985,215 tonnes compare to November 2013’s stock level at 1,978,685 tonnes.

Export fell 1.36 per cent to 1,507,554 tonnes compared to November 2013’s export level at 1,528,281 tonnes.

After three straight weeks of gains, palm oil prices dropped more than four per cent this week due to fears of oversupply of global edible oils which was also dragged by weak competing US and China soy markets.

Investors were concerned that the tropical oil’s refined grade would take a hit after top consumer India raised import duties to 10 per cent from 7.5 per cent.

Ringgit strengthened steadily throughout the week 3.268 from the high at 3.2935 as investor await US jobs data for hints on how aggressively the Federal Reserve would scale back its stimulus.

Normally, a stronger ringgit will decrease demand from foreign buyers as they have to pay more to purchase palm oil.

 

Technical View 

From the chart, price broke and closed below the support line (below black line) which causes more persistent selling pressure in the market.

Currently, price may revisit the gap left behind (2,503 to 2,506). Price may retreat even further as we believe a correction is taking place from the current up trend since 2,137.

For the coming week we pegged our important support levels at 2,506, 2,485 and 2,420.

Meanwhile, for our resistance levels, we pegged important ones at 2,545, 2,600 and 2,690.

 

Major fundamental news this coming week

ITS and SGS Export reports – January 15 (Wednesday)

 

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.