Malaysian palm oil futures climbed higher on Friday to 2,544, due to a weakening ringgit.
Future Crude Palm Oil (FCPO) benchmark May 2016 contract settled at 2,544 on Friday, down 41 points or 1.6 per cent from 2,585 last Friday.
Trading volume increased to 195,759 contracts from 186,668 contracts from last Monday to Thursday.
Open interest based increased to 827,750 contracts from 784,693 contracts from last Monday to Thursday.
Cargo surveyor, Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during February 1 to 20 decreased 10.8 per cent to 594,944 tonnes compared with 666,816 tonnes during January 1 to 20.
Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during February 1 to 25 decreased 14.8 per cent to 787,693 tonnes compared with 924,983 tonnes during January 1 to 25.
Another cargo surveyor, Societe Generale de Surveillance (SGS), reported that Malaysia’s palm oil exports during February 1 to 20 decreased 12.6 per cent to 582,297 tonnes compared with 666,288 tonnes during January 1 to 20.
SGS’ report showed that Malaysia’s palm oil exports during February 1 to 25 decreased 16.1 per cent to 781,030 tonnes compared with 931,173 tonnes during January 1 to 25.
Overall, demand strengthened from the US, while demand weakened from China, India, Pakistan, and the European Union.
Spot ringgit strengthened on Friday to 4.2070, as crude oil prices continued to rebound. According to Reuter’s, Indonesia’s export tax for crude palm oil will be zero per cent in March, unchanged from this month.
On Monday, the price fell for the third consecutive day, retracing lower from earlier gains, due to an unexpected rise in production numbers.
On Tuesday, the price declined for a fourth consecutive day, touching the lowest in more than two weeks, after data from the Southern Palm Oil Millers Association showed an unexpected rise in production.
On Wednesday, the price fell, for the fifth consecutive day, hitting the lowest in three weeks, weighed down by surprise signs of improved output and weak export demand.
On Thursday, the price rose by more than one per cent, ending five successive days of declines, on market short covering and expectations of lower inventories at the end of February.
On Friday, the price climbed, for the second consecutive day, continuing to rebound higher after five successive days of losses earlier in the week, due to a weakening ringgit. However, the benchmark contract was still set for a weekly fall of around two per cent.
Technical analysis
According to the weekly FCPO chart, the price opened below the top Bollinger band and psychological barrier at 2,600. By the end of the week, the price tested the psychological barrier at 2,600, closing below, while the SO remained in overbought territory.
According to the daily FCPO chart, on Monday, the price opened below the top Bollinger band and psychological barrier at 2,600. By the later session, the price tested the psychological barrier at 2,600, closing below.
On Tuesday, the price opened above the middle Bollinger band and support level 2,550. A downside gap was formed from 2,555 to 2,565, which if able to be covered, could indicate potential to test the psychological barrier at 2,600.
By the later session, the previous gap was able to be covered, while the price tested the middle Bollinger band and support level at 2,550, closing above.
On Wednesday, the price opened below the middle Bollinger band and support level at 2,550. A downside gap was formed from 2,535 to 2,550, which if able to be covered, could indicate potential to close above middle Bollinger band and support level 2,550. By the later session, the previous gap was unable to be covered, while the price tested the middle Bollinger band, closing below.
On Thursday, the price opened below the middle Bollinger band and support level at 2,550. An upside gap was formed from 2,520 to 2,530, which if able to be covered, could indicate potential to test psychological barrier at 2,500. By the later session, the previous gap was unable to be covered, while the price tested the middle Bollinger band and support level 2,550, closing below.
On Friday, the price opened below the middle Bollinger band and support level at 2,550, while the SO entered oversold territory. By the later session, the price tested middle Bollinger band and support level 2,550, closing below.
In the coming week, the price has potential to range between 2,550 and 2,650. Resistance lines will be placed at 2,590 and 2,650, while support lines will be positioned at 2,470 and 2,410, these levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS report released on February 29 (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.