Malaysian palm oil futures edged lower on Friday to 2,181, due to tracking falling crude oil prices and poor export data.
Futures Crude Palm Oil (FCPO) benchmark December 2014 contract settled at 2,181, up 11 points or 0.51 per cent from 2,170 last Friday.
Trading volume decreased to 121,455 contracts from 132,677 contracts from last Tuesday to Thursday.
Open interest based increased to 811,961 contracts from 798,003 contracts from last Tuesday to Thursday.
Cargo surveyor, Intertek Testing Services (ITS) reported that exports of Malaysia palm oil products during October 1 to 10 fell 18.9 per cent to 395,532 tonnes compared with 487,955 tonnes during September 1 to 10. On the whole, overseas demand weakened, especially from the European Union (EU) and China.
Spot ringgit weakened on Friday to 3.256, due to investors anticipating a slowing global economy, paired with investors taking profits after reaching a three week high in the earlier session, according to Reuters.
A Reuter’s survey reported Malaysian palm oil stocks in September remained unchanged from August at 2.05 million tonnes. Production decreased eight per cent, while exports increased 11.3 per cent, due to the removal of export duty. However, it did not increase as much as originally expected.
The Malaysian Palm Oil Board (MPOB) reported that for September stocks rose 1.8 per cent which is slightly above initial estimates, and the highest in 18 months. The removal of export tax failed to increase overseas exports enough to counter increasing inventories, and production was down by 6.64 per cent, while exports increased 13.27 per cent.
After the long weekend, the FCPO price rose, due to strengthening soybean prices, as adverse weather in the US could harm the output of record crops, coupled with a weakening ringgit, and expectation of lower output in Malaysia due to wet weather.
The price then dropped, due to tracking decreasing rival edible oil prices, including soybean and crude, while the ringgit strengthened, caused by expectation the Federal Reserve could raise interest rates soon than predicted, and paired with poor export data.
Technical analysis
According to weekly FCPO chart, the candlestick formed was a bearish spinning top, indicating investors are undecided on the direction of the market, while ending six consecutive weeks of gains.
Next week, the price could either bounce or break middle bollienger band 2,240. This will be monitored.
According to the daily FCPO chart, the price tested resistance line 2,190, closing below. The price then broke resistance line 2,190, and closed above, while continuing to range between middle and top bollienger band. The price then dropped below resistance line 2,190, but recovered, testing resistance line 2,220. The price fell again, closing above resistance line 2,190. The price then broke below resistance line 2,190, closing below, while testing middle bollienger band.
Next week, the price could range between middle and top bollienger band, 2,150 to 2,250.
Resistance lines will be place at 2,220, and 2,250, while support lines will be placed at 2,150 and 2,110, these will observed for next week.
Fundamental analysis
ITS and SGS report on October 15 (Wednesday).
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