Crude Palm Oil Weekly Report – 5 September 2015

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TA01244Malaysian palm oil futures climbed higher on Friday to 2,033, as the market continued to rebound after hitting multi-year low last week on worries about the economic growth in key consumer China.

Future Crude Palm Oil (FCPO) benchmark for November 2015 contract settled at 2,033 on Friday, up 39 points or 1.96 per cent from 1,994 last Friday.

Trading volume decreased to 155,673 contracts from 193,675 contracts from last Tuesday to Thursday.

Open interest based decreased to 648,492 contracts from 661,416 contracts from last Tuesday to Thursday.

Cargo surveyor, Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during August decreased 1.2 per cent to 1.525 million tonnes compared with 1.544 million tonnes during July.

Another cargo surveyor, Societe Generale de Surveillance’s (SGS) report showed that Malaysia’s palm oil exports during August increased 0.2 per cent to 1.542 million tonnes compared with 1.54 million tonnes during July.

Overall, demand rose from the European Union (EU), while demand declined from the US, China and the rest of the Asian sub-continent.

Spot ringgit weakened on Friday to 3.226, as a political scandal continued to fray investor confidence in the wake of large-scale anti-government demonstrations last weekend.

On Tuesday, the price rose, for a third consecutive day, touching the highest in nearly two weeks, due to a jump in crude oil prices overnight and gains in competing vegetable oil markets, while recent data showing weaker exports and a stronger ringgit had little impact.

On Wednesday, the price fell while staying range-bound, after three consecutive sessions of strong gains, as a drop is seen in commodity markets due to concerns over China’s growth weighed on prices.

On Thursday, the price climbed, touching the highest in two weeks as the price reversed earlier losses and rebounded in the second session, due to a weaker ringgit and bargain hunting by traders.

On Friday, the price rose for the second consecutive day, hovering near a two week high, as the market continued to recover after hitting a multi-year low last week on worries about the economic growth in key consumer China.

 

Technical analysis

According to the weekly FCPO chart, the price opened above the bottom Bollinger band, while the SO exits oversold territory. By the end of the week, the price tested the psychological barrier 2,000, closing above.

According to the daily FCPO chart, on Tuesday, the price opened below the middle Bollinger band, and the psychological barrier 2,000. By the later session, the price tested the resistance level 2,010, closing below, while closing above the middle Bollinger band. Daily volume was above the normal daily average volume.

On Wednesday, the price opened below the middle Bollinger band and psychological barrier 2,000. A downside gap was formed from 1,990 to 2,010, which may be covered in near term or indicate downward pressure as it was unable to successfully break above psychological barrier 2,000. By the later session, the previous gap was unable to be covered, while price tested middle Bollinger band and psychological barrier 2,000, closing below.

On Thursday, the price opened below the middle Bollinger band and psychological barrier 2,000. By the later session, the price tested the resistance level at 2,010 and middle Bollinger band, closing above. Daily volume was less than the average normal daily volume.

The price attempted to test the resistance level at 2,050, however it was unable to.

On Friday, the price opened above the middle Bollinger band and resistance level 2,010, while the SO enters overbought territory. By the later session, the price tested the resistance level at 2,010, closing above. Daily volume was marginally above the daily average volume.

In the coming week, the price has the potential to range between 1,950 and 2,150.

Resistance lines will be placed at 2,050 and 2,110, while support lines will be positioned at 1,990 and 1,950, these levels will be observed this coming week.

 

Major fundamental news this coming week

ITS and SGS report released on the September 10 (Thursday).

MPOB report released on the September 10 (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.