Malaysian palm oil futures climbed higher on Friday to 2,147, recovering earlier losses, due to a weakening ringgit.
Futures Crude Palm Oil (FCPO) benchmark April 2015 contract settled at 2,147, down 80 points or 3.7 per cent from 2,227 last Friday.
Trading volume increased to 211,082 contracts from 204,163 contracts from last Monday to Thursday.
Open interest based on decreased to 672,522 contracts from 709,736 contracts from last Monday to Thursday.
Cargo surveyor Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during January 1 to 25 decreased 17.7 per cent to 886,189 tonnes compared with 1.077 million tonnes during December 1 to 25.
Another cargo surveyor, Societe Generale de Surveillance (SGS), reported that Malaysia’s palm oil exports during January 1 to 25 decreased 19 per cent to 877,730 tonnes compared with 1.083 million tonnes during December 1 to 25.
Overall, demand from the EU, India, China, and the US continued to decrease.
Spot ringgit weakened on Friday to 3.6290, the lowest since 2009, due to concerns over falling crude prices which could damage the country’s current account surplus, and increase the fiscal deficit.
Indonesia will set its crude palm oil export tax for February at zero, according to their trade ministry.
According to a report by Reuters, palm oil prices could rise in 2015, due to poor weather harms production and harvesting, however the oversupply of rival oilseeds, coupled with volatile crude oil markets could limit gains.
On Monday, Tuesday, Thursday the price fell due to weak overseas demand, increasing concerns that the usage of palm oil in food and fuel industries could continue to fall, paired with weak competing oil prices, and an oversupply of edible oils paired with demand slowing.
However the price was supported, due to a weakening ringgit. On Wednesday, the price rose, recovering recent losses, due to technical buying.
On Friday, the price initially fell, due to weakness in competing markets, coupled with poor export figures. However by the late afternoon, the price rose, recovering earlier losses, due to a weakening local currency.
Technical analysis
According to weekly FCPO chart, the price broke middle Bollinger band, 2,200. According to the daily FCPO chart, on Monday, the price fell, breaking psychological level 2,200, and support line 2,190, and the price remains in oversold territory, while closing below bottom Bollinger band.
On Tuesday, the price initially fell, testing support line at 2,150.
However, by the later session, the price increased as earlier losses were recovered, eventually closing flat, above support line 2,150, while below the lower Bollinger band.
On Wednesday, the price opened lower, testing the bottom Bollinger band, however by the later session the price rose, breaking above the bottom Bollinger band, and closing above the support line at 2,190, and psychological barrier at 2,200.
On Thursday, the price fell, opening below support line 2,190, and continued to fall, closing below support line 2,150 and bottom Bollinger band.
On Friday, the price initially fell, however by the late session, the price rose, recovering early losses, closing above bottom Bollinger band.
In the coming week, the price has potential to range between 2,100 and 2,200.
Resistance lines will be placed at 2,190, 2,250, while support lines will be positioned at 2,090 and 2,040, these will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS report on February 4 (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.