Crude Palm Oil Weekly Report – March 14, 2015

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Malaysian palm oil futures stayed within a tight range on Friday to 2,247, as investors await clear market direction.

Future Crude Palm Oil (FCPO) benchmark May 2015 contract settled at 2,247 on Friday, down 43 points or 1.9 per cent from 2,290 last Friday.

Trading volume increased to 197,518 contracts from 161,217 contracts from last Monday to Thursday.

Open interest based on decreased to 757,202 contracts from 762,702 contracts from last Monday to Thursday.

Cargo surveyor, Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during March 1 to 10 decreased 12.3 per cent to 262,168 tonnes compared with 298,910 tonnes during February 1 to 10.

Societe Generale de Surveillance (SGS) report showed that Malaysia’s palm oil exports during March 1 to 10 decreased 19.3 per cent to 247,698 tonnes compared with 307,122 tonnes during February 1 to 10.

Overall, overseas demand slowed from China, the EU, and the US.

Spot ringgit strengthened on Friday to 3.6855, due to falling oil prices, coupled with renewed concerns that weakening oil prices could hurt the country’s account surplus and increase the fiscal deficit.

The Malaysian Palm Oil Board (MPOB) report showed that February palm oil exports were at 0.97 million tonnes, down 18.4 per cent from January, February palm oil production was at 1.12 million tonnes, down 3.3 per cent from January, and February palm oil end stocks were at 1.74 million tonnes, down 1.5 per cent from January.

A US Department of Agriculture (USDA) reported that domestic soy inventories were unchanged, from the monthly report.

On Monday and Tuesday, the price fell, as losses in soy oil and crude markets, coupled with the release of weak export figures, outweighed support by a weakening ringgit, paired with planter’s estimates showing steady palm production.

On Wednesday, the price rose, ending five consecutive days of declines, as the ringgit slid to its weakest in six years.

Gains were limited by narrowing discount in palm compared to rival soy oil.

On Thursday, the price fell, eradicating previous gains, due to a strengthening ringgit, coupled with investor’s worries over declining demand for the tropical oil.

On Friday, the price initially fell, due to concerns of weak demand, however, by the later session the price recovered earlier losses, as investors await fresh market direction.

 

Technical analysis

According to the weekly FCPO chart, the price fell, after bouncing to the top Bollinger band in the previous week, breaking middle Bollinger band, closing below.

According to the daily FCPO chart, on Monday, the price opened below the psychological level at 2,300, the price initially tested the middle Bollinger band and psychological level at 2,300, then in the later session gains were eliminated as the price fell, testing the support line at 2,250, and closing above.

On Tuesday, the price continued to drop, breaking and closing below the support line at 2,250, while testing the bottom Bollinger band, closing above.

On Wednesday, the price climbed, breaking and closing above the support line at 2,250.

On Thursday, the price dropped, eliminating gains from previous day, testing the support line at 2,250, and closing below.

On Friday, the price fell, however by the later session the price managed to recover earlier losses, testing the support line at 2,250, closing below.

In the following week, the price has potential to range between 2,200 and 2,300.

Resistance lines will be placed at 2,290 and 2,350, while support lines will be positioned at 2,210 and 2,150, these levels will be observed next week.

 

Major fundamental news this coming week

ITS and SGS report on March 16 (Monday) and March 20 (Friday).

 

 

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.