Crude Palm Oil Weekly Report – November 7, 2015

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TA01693Malaysian palm oil futures edged lower on Friday to 2,323, heading towards a marginal weekly decline, as high inventory levels prompted traders to take profits after earlier gains.

Future Crude Palm Oil (FCPO) benchmark January 2015 contract settled at 2,323 on Friday, down 39 points or 1.7 per cent from 2,362 last Friday.

Trading volume increased to 185,638 contracts from 182,905 contracts from last Monday to Thursday.

Open interest based increased to 780,997 contracts from 749,438 contracts from last Monday to Thursday.

Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during October decreased 2.4 per cent to 1.496 million tonnes compared with 1.533 million tonnes during September.

Societe Generale de Surveillance’s (SGS) report showed that Malaysia’s palm oil exports during October decreased three per cent to 1.505 million tonnes compared with 1.552 million tonnes during September.

Overall, demand strengthened from the US, Pakistan, and India, while demand weakened from the EU and China.

Spot ringgit was weakened on Friday to 4.3070, ahead of key US jobs data and was set to post weekly losses on growing expectations that the Federal Reserve might raise interest rates next month.

On Monday and Tuesday, the price fell for the third consecutive day, more than two per cent, due to slowing demand from key importing nations and high stockpiles.

On Wednesday, the price rose for the second consecutive day, ending three successive days of declines this week, after top exporter Indonesia announced the companies that had won quotas to supply biodiesel to state-owned energy firm Pertamina, while expectations of a seasonal drop in output also buoyed prices.

On Thursday and Friday, the price fell, reversing some of the gains in the previous session following news of a large Indonesian biodiesel deal, as ample supplies prompted some traders to lock in profits before the weekend.

 

Technical analysis

According to the weekly FCPO chart, the price opened above the middle Bollinger band and psychological barrier at 2,300.

By the end of the week, the price tested the psychological barrier at 2,300, closing above.

According to the daily FCPO chart, on Monday, the price opened above the middle Bollinger band.

A downside gap was formed from 2,260 to 2,270, which might be covered, or indicate downward pressure after attempting to test the psychological barrier at 2,400.

By the later session, the previous gap was covered, while the price closed above the middle Bollinger band, and the SO exited overbought territory.

On Tuesday, the price opened below the middle Bollinger band, and above the support level at 2,310.

A downside gap was formed from 2,315 to 2,330, which might be covered in the near term, or indicate potential to test the psychological barrier at 2,300. By the later session, previous gap was unable to be covered, while the price tested the middle Bollinger band, closing below and testing the psychological barrier at 2,300, closing above.

Daily volume was less than average daily volume amount. A bearish hammer candlestick was formed, indicating potential reverse from the psychological barrier at 2,300.

On Wednesday, the price opened below the middle Bollinger band and support level at 2,310. By the later session, the price tested the middle Bollinger band and support level at 2,310, closing above.

On Thursday, the price opened above the middle Bollinger band, while an upside gap was formed from 2,360 to 2,375, which might be covered or indicate a potential to test the psychological barrier at 2,400.

By the later session, the previous gap was covered, while the price tested the resistance level at 2,390, closing below.

A bearish shooting star candlestick was formed, indicating potential reversal towards the middle Bollinger band, after testing resistance level at 2,390. Daily volume was above the normal average daily volume amount.

On Friday, the price below the middle Bollinger band and above the support level at 2,310. A downside gap was formed from 2,325 to 2,340, which might be covered or indicate selling pressure towards the psychological barrier at 2,300.

By the later session, the previous gap was unable to be covered, while the price tested the support level at 2,310 and the middle Bollinger band, closing above. Daily volume was below the normal average daily volume amount.

In the coming week, the price has potential to range between 2,270 and 2,400.

Resistance lines will be placed at 2,370 and 2,450, while support lines will be positioned at 2,270 and 2,210, these levels will be observed this coming week.

 

Major fundamental news this coming week

ITS and SGS report released on November 11 (Wednesday). MPOB report released on November 11 (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.