Malaysian palm oil futures stayed within a tight range, climbing marginally, on Friday to 2,153, due to weakening oil prices being countered by expectations of wet weather which could lower output.
Futures Crude Palm Oil (FCPO) benchmark March 2015 contract settled at 2,153, down 18 points or 0.84 per cent from 2,171 last Friday.
Trading volume increased to 198,058 contracts from 186,242 contracts from last Monday to Thursday.
Open interest decreased to 729,576 contracts from 768,805 contracts from last Monday to Thursday.
Cargo surveyor, Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during December 1 to 15 increased 2.93 per cent to 615,805 tonnes compared with 598,269 tonnes during November 1 to 15.
In a separate report, Societe Generale de Surveillance (SGS) stated that Malaysia’s palm oil exports during December 1 to 15 increased 2.1 per cent to 618,134 tonnes compared with 605,624 tonnes during November 1 to 15.
Overall, demand from the EU, India and the US increased, while demand from China continued to slow.
Spot ringgit weakened on Friday to 3.4750, due to anxiety falling oil prices which could harm the economy.
Initially, the price fell slightly, but gained due to positive export figures coupled with a weakening ringgit which offset falling crude oil prices.
The price continued to drop, due to falling crude oil prices which reached a new five and a half year low, coupled with volatile emerging Asian markets which kept investors anxious.
The price then rose, after initially falling due to weak soy and crude markets, coupled with investors’ anxiousness over a possible financial crisis in Russia, the price then covered early losses due to technical buying.
The price continued to rise, due to crude oil prices recovering, coupled with the wet weather which increased expectations that output would be lower this month.
By the end of the week the price ranged, as weakening oil markets decreased palm’s biodiesel attractiveness which countered expectations that the continuing monsoon season would harm output this month.
Technical analysis
According to weekly FCPO chart, the candlestick formed was a hanging man. Overall, the price had attempted to break below middle Bollinger band, but closed above it.
According to the daily FCPO chart, the price fell slightly, after testing the middle Bollinger band but it was unable to break the middle band, causing price to rebound.
The price continued to fall, breaking and closing below support line 2,140. The price initially tested psychological barrier 2,100 and lower Bollinger band, after unable to break below, the price then rose covering losses.
The price continued to rise, and rebound the lower Bollinger band, breaking above support line 2,140. The price ranged, while continuing to remain above support line 2,140.
In the coming week, the price has the potential to range 2,100 to 2,200.
Wait until break either psychological barrier for clearer market direction.
Resistance lines will be placed at 2,190 and 2,250, while support lines will be positioned at 2,110 and 2,050. These will be observed next week.
Major fundamental news this coming week
ITS and SGS report on December 22 (Monday) and December 26 (Friday). Christmas Day on December 25 (Thursday).
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.