Malaysian palm oil futures climbed marginally higher on Friday to 2,173, due to a weakening ringgit.
Futures Crude Palm Oil (FCPO) benchmark February 2015 contract settled at 2,173, up three points or 0.14 per cent from 2,170 last Friday.
Trading volume increased to 207,485 contracts from 153,500 contracts from last Monday to Thursday.
Data analysis for this week’s total open interest is unavailable due to technical issues.
Cargo surveyor, Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products during November 1 to 30 decreased 9.8 per cent to 1.324 million tonnes compared with 1.468 million tonnes during October 1 tp 31.
In a separate report, Societe Generale de Surveillance (SGS) said that Malaysia’s palm oil exports during November 1 to 30 decreased 10.5 per cent to 1.31 million tonnes compared with 1.464 million tonnes during October 1 to 31.
Overall, demand from India, the EU, and the US dropped, while demand from China remained steady.
Spot ringgit weakened on Friday to 3.4695, which was a fibe-year low against the dollar, due to disappointing trade data.
At the start of the week, the price fell significantly, the biggest daily drop in 16 months, hitting a two month low, due to export data showing a fall in overseas demand for palm oil, coupled with crude oil prices hitting five year lows, and weak bean oil markets and prices.
The decline in crude oil price has caused decreases the appeal for palm oil as a bio-fuel.
However, losses were limited due to the weakening ringgit.
The price then rose, owed to investors’ short covering positions. The drop was initially due to weak soybean oil prices.
The price then recovered the earlier intra-day losses, and has since increased considerably due to gains in competing soyoil markets coupled with expectation smaller output in December.
The price then dropped again, while staying within a tight range, due to doubts over the direction of crude oil markets. However, confidence of cheaper palm prices would attract buyer’s limited losses.
By the end of the week, the price continued to stay within a tight price range, dropped initially due to falling crude oil prices, but the price managed to recover due to a weakening ringgit.
Technical analysis
According to weekly FCPO chart, the price hovered around middle Bollinger band, eventually closing above.
According to the daily FCPO chart, the price dropped, breaking support line 2,110, while breaking below psychological level 2,100.
The price managed to recover, closing above psychological level 2,100, while the price broke below lower Bollinger band and into oversold territory.
The price then climbed higher, closing above support line 2,110, and lower Bollinger band.
The price dropped initially, testing psychological level 2,100, but could not break, while opening below lower Bollinger band. The price then climbed, breaking support line 2,150, closing above, while breaking above lower Bollinger band.
The price then dropped slightly, while remaining within a tight range, unable to break below support 2,150 or psychological level 2,200.
The price continued to remain with a tight price range by the end of the week, while continuing to stay within lower and middle Bollinger band.
In the coming week, the price could potentially range between 2,100 and 2,200, and until break either psychological barriers, will have clearer market direction Resistance lines will be placed at 2,210 and 2,250, while support lines will be positioned at 2,110 and 2,050, these will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS report on December 10 (Wednesday). MPOB report on December 10 (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.