Crude Palm Oil Weekly Report – November 8, 2014

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Malaysian palm oil futures edged lower on Friday to 2,195, due to expectation of weak export figures in November.

Futures Crude Palm Oil (FCPO) benchmark January 2015 contract settled at 2,195, down 112 points or 5.1 per cent from 2,307 last Friday.

Trading volume decreased to 203,969 contracts from 215,702 contracts from last Monday to Thursday.

Open interest based decreased to 898,845 contracts from 954,902 contracts from last Monday to Thursday.

Spot ringgit weakened on Friday to 3.3450, due to data showing Malaysian exports growing less than expected in September.

According to Reuters, Malaysian palm oil stocks will potentially rise above the two million tonne mark by the end of October as exports of the tropical oil dropped, while production could fall two per cent from September.

Overall, exports are predicted to be down three per cent.

Initially, the price rose, reaching a three and a half month high, due to the weakening ringgit to a nine-month low, coupled by lower output projections.

The price then fell, owed to tracking heavy losses in soy and crude oil markets. Nevertheless, the weakening ringgit limited losses and provided support.

Subsequently the price rose, due to brent prices bouncing off a four year low as the ringgit remained weak.

However, the price then fell further due to declining crude oil prices. The price had initially increased due to strengthening oilseed markets and a weakening ringgit. However, the price then dropped further due to investors anticipating bearish export figures this month.

 

Technical analysis

According to weekly FCPO chart, the candlestick formed was a bearish shooting star. The price fell this week back towards middle bollienger band. If the price breaks 2,150, could fall lower.

According to the daily FCPO chart, the price increased, testing resistance line 2,340, and closing below, while the top bollienger band continues to expand. The price then decreased, falling below top bollienger band, while testing psychological level 2,300, eventually closing above.

The price dropped further, closing below support line 2,260, while continuing to be pressured towards middle bollienger band.

The price, initially rose above support line 2,260, however could not hold and continued to drop towards middle bollienger band, closing below.

The price continued to fall, breaking support line 2,210 and psychological level 2,000, and middle bollienger band, closing below.

As the price closed below middle bollienger band, the price could range between 2,200 and 2,050.

Resistance lines will be placed at 2,240, and 2,290, while support lines will be positioned at 2,150 and 2,110, these will be observed next week.

 

Major fundamental news this coming week

ITS and SGS report on November 10 (Monday). MPOB report on November 10 (Monday).

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.