Crude Palm Oil Weekly Report – December 5, 2015

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TA01928Malaysian palm oil futures climbed higher on Friday to 2,367, on expectations that dry weather due to the El Nino weather pattern will reduce production across Southeast Asia.

Future Crude Palm Oil (FCPO) benchmark February 2015 contract settled at 2,367 on Friday, up six points or 0.25 per cent from 2,361 last Friday.

Trading volume increased to 168,726 contracts from 137,402 contracts from last Monday to Thursday.

Open interest based increased to 788,179 contracts from 784,399 contracts from last Monday to Thursday.

Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during November decreased 10.1 per cent to 1.345 million tonnes compared with 1.496 million tonnes during October.

Societe Generale de Surveillance’s (SGS) report showed that Malaysia’s palm oil exports during November decreased 10.2 per cent to 1.351 million tonnes compared with 1.505 million tonnes during October.

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

Spot ringgit weakened on Friday to 4.224, as exports climbed almost twice as fast as economists forecast in October to provide the biggest trade surplus since 2011.

On Monday, the price fell, retracing lower after testing the highest in more than two weeks during the previous session and ending three successive days of gains, due to poor export data.

On Tuesday, the price declined for a second consecutive day as traders expect high inventories and weak export demand ahead of the government’s data.

On Wednesday, the price fell for the third consecutive day touching the lowest in nearly a week due to a strengthening ringgit reduced demand and it offset expectations of a decline in inventories due to the monsoon season.

On Thursday, the price rose by more than one per cent, ending three successive days of decline due to tracking gains in other vegetable oils while a weaker ringgit and expectations of lower output in the coming weeks also boosted sentiment.

On Friday, the price climbed for the second consecutive day, touching the highest in four week, on expectations that dry weather due to the El Nino weather pattern will reduce production across Southeast Asia.

 

Technical analysis

According to the weekly FCPO chart, the price opened and closed above the middle Bollinger band and psychological barrier at 2,300.    According to the daily FCPO chart, on Monday, the price opened above the middle Bollinger band and psychological barrier at 2,300. A downside gap was formed from 2,345 to 2,360, which may be covered or indicate potential to retest the psychological barrier at 2,300. By the later session, the previous gap was covered, while the price closed above the middle Bollinger band.

On Tuesday, the price opened above the middle Bollinger band and psychological barrier at 2,300. An upside gap was formed from 2,345 to 2,365, which if able to be covered, could indicate potential to retest the psychological barrier at 2,300. By the later session, the previous gap was able to be covered, while the price tested the top Bollinger band, closing below.

On Wednesday, the price opened above the middle Bollinger band and psychological barrier at 2,300. An upside gap was formed from 2,340 to 2,355, which if able to be covered, could indicate potential to test the psychological barrier 2,300 and middle Bollinger band.

By the later session, the previous gap was covered, while the price tested the middle Bollinger band, closing above.

On Thursday, the price opened above the middle Bollinger band and psychological barrier at 2,300. An upside gap was formed from 2,330 to 2,345, which if able to be covered, could indicate potential to test the psychological barrier at 2,300.

By the later session, the previous gap was unable to be covered, while the price closed above the middle Bollinger band.

On Friday, the price opened above the middle Bollinger band and psychological barrier at 2,300.

By the later session, the price tested the top Bollinger band, closing below, while the SO entered overbought territory.

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

Resistance lines will be placed at 2,390 and 2,450, while support lines will be positioned at 2,310 and 2,270, these levels will be observed in the coming week.

 

Major fundamental news this coming week

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