Malaysian palm oil futures was pressured lower on Thursday to 2,190, due to concerns over slowing demand and rising supplies which pressured the market.
Future Crude Palm Oil (FCPO) benchmark October 2015 contract settled at 2,190 on Thursday, down two points or 0.9 per cent from 2,192 last Friday.
Trading volume decreased to 93,777 contracts from 97,663 contracts from last Monday to Wednesday.
Open interest based decreased to 561,154 contracts from 576,040 contracts from last Monday to Wednesday.
Cargo surveyor, Intertek Testing Services (ITS), reported that exports of Malaysia’s palm oil products during July 1 to 15 decreased 14.6 per cent to 666,132 tonnes compared with 780,387 tonnes during June 1 to 15.
Another cargo surveyor, Societe Generale de Surveillance (SGS), reported that Malaysia’s palm oil exports during July 1 to 15 decreased 15.1 per cent to 664,641 tonnes compared with 782,854 tonnes during June 1 to 15.
Overall, demand rose from China and the US, while demand fell from the EU and India.
Spot ringgit weakened on Thursday to 3.806, due to Bank Negara defending the local currency this week.
Indonesia will impose a levy on palm oil exports starting on Thursday after weeks of delay, providing as much as 4.5 trillion rupiah (US$337.58 million) this year to state coffers, government officials said.
On Monday, the price was mostly unchanged, after touching the lowest in six weeks last week, with a decline in exports keeping a lid on gains.
On Tuesday, the price rose for a 4th consecutive day, touching a one week high, due to short-coverings ahead of holidays and strengthening rival soybean oil prices.
On Wednesday and Thursday, the price fell, retreating after touching the highest in a week, due to concerns over slowing demand and rising supplies pressured the market.
Technical analysis
According to the weekly FCPO chart, the price opened below the middle Bollinger band and within the previous sideways range 2,135 to 2,185. By the end of the week the price tested the middle Bollinger band and the psychological barrier at 2,200, closing within sideways range. The price broke above sideways range 2,135 to 2,185 however the price continues to remain pressured by the psychological barrier 2,200.
According to the daily FCPO chart, on Monday, the price opened above the bottom Bollinger band and within the previous sideways range 2,135 to 2,185. A downside gap from 2,175 to 2,190 was formed. By the later session, the previous gap was covered, while the price tested the psychological barrier at 2,200, closing below, and above the sideways range, while volume remained below average.
On Tuesday, the price opened above the psychological barrier 2,200, while an upside gap was formed from 2,195 to 2,215. The price tested the middle Bollinger band, closing below. By the later session, the price tested the psychological barrier at 2,200, closing above.
On Wednesday, the price opened above the psychological barrier at 2,200. By the later session, the previous day upside gap was covered, while the price tested sideways resistance level 2,185, closing above.
On Thursday, the price opened within sideways range 2,135 to 2,185. By market close, the price tested the psychological barrier at 2,200, closing below.
This coming week, the price has potential to range between 2,200 and 2,300.
Resistance lines will be placed at 2,230 and 2,290, while support lines will be positioned at 2,150 and 2,090, these levels will be observed this coming week.
Major fundamental news this coming week
ITS and SGS report released on July 20 (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.