Malaysian palm oil futures climbed higher on Friday to 2,402, boosted by concerns that production would be hit by year-end monsoon and expectations of higher imports by China.
Future Crude Palm Oil (FCPO) benchmark March 2016 contract settled at 2,402 on Friday, down 38 points or 1.6 per cent from 2,440 last Friday.
Trading volume increased to 187,461 contracts from 169,463 contracts from last Monday to Thursday.
Open interest based decreased to 785,000 contracts from 808,622 contracts from last Monday to Thursday.
Cargo surveyor, Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during December 1 to 15 decreased 35.6 per cent to 466,876 tonnes compared with 724,992 tonnes during November 1 to 15.
Another cargo surveyor, Societe Generale de Surveillance (SGS) reported that Malaysia’s palm oil exports during December 1 to 15 decreased 34.1 per cent to 463,618 tonnes compared with 703,768 tonnes during November 1 to 15.
Overall, demand strengthened from the US, while demand weakened from the EU, China, Pakistan, and India.
Spot ringgit strengthened on Friday to 4.2870, as traders covered bearish bets in the worst-performing Asian currency of the year ahead of the weekend.
According to a Reuter’s survey, Indonesia’s crude palm oil (CPO) output slipped seven per cent in November from the previous month, as the main harvest season ended and monsoon weather arrived in key growing areas.
On Monday, the price fell, retracing from a two month high as slow demand for palm and weak crude oil prices caps gain.
On Tuesday, the price declined, by more than three per cent, their sharpest fall in two-and-a-half months after cargo surveyor data showed little signs of improvement in exports.
On Wednesday, the price gave up earlier gains due to weak exports and high end-stocks
On Thursday, the price fell, for the fourth consecutive day, weighed by falling crude and declines in competing vegetable oils as well as concerns of slowing exports.
On Friday, the price rose, ending four successive days of declines, supported by worries that output would be hit by year-end monsoon and expectations of higher imports by China.
Technical analysis
According to the weekly FCPO chart, the price opened above the middle Bollinger band and above psychological barrier at 2,400. By the end of the week, the price tested the psychological barrier at 2,400, closing above, while the SO remained in overbought territory.
According to the daily FCPO chart, on Monday, the price opened below the top Bollinger band, while the SO continued to remain in overbought territory.
A downside gap was formed from 2,430 to 2,440, which if able to be covered, could indicate potential to test resistance level 2,490. By the later session, the previous gap was unable to be covered, while the price closed below the top Bollinger band.
On Tuesday, the price opened below the top Bollinger band and above psychological barrier at 2,400. An upside gap was formed from 2,405 to 2,410, which if covered, may indicate potential to test the psychological barrier at 2,400.
By the later session, the previous gap was able to be covered, while the price tested support level at 2,350 and middle Bollinger band, closing below, while the SO exited overbought territory.
On Wednesday, the price opened above the middle Bollinger and psychological barrier at 2,400. An upside gap was formed from 2,335 to 2,410, which if able to be covered, may indicate potential to test psychological barrier at 2,300. By the later session, the previous gap was unable to be covered, while the price tested the resistance level at 2,390, closing above psychological barrier at 2,400.
On Thursday, the price opened above the middle Bollinger band and on resistance level at 2,390.
A downside gap was formed from 2,390 to 2,405, which if able to be covered, may indicate potential to close above psychological barrier at 2,400. By the later session, the previous gap was covered, while the price closed below the resistance level at 2,390.
On Friday, the price opened above the middle Bollinger band and below resistance level at 2,390. A downside gap was formed from 2,375 to 2,385, which if able to be covered, may indicate potential to test the resistance level at 2,390.
By the later session, the previous gap was able to be covered, while the price tested the psychological barrier at 2,400, closing above.
In the coming week, the price has potential to range between 2,370 and 2,500. Resistance lines will be placed at 2,450 and 2,490, while support lines will be positioned at 2,350 and 2,290, these levels will be observed this week.
Major fundamental news this coming week
ITS and SGS report released on the December 21 (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.