Malaysian palm oil futures climbed higher on Friday to 2,632, due to tracking a rebounded in competing vegetable oils.
Future Crude Palm Oil (FCPO) benchmark July 2016 contract settled at 2,632 on Friday, up 40 points or 1.5 per cent from 2,592 last Friday.
Trading volume increased to 179,764 contracts from 165,323 contracts from last Tuesday to Thursday.
Open interest based increased to 826,594 contracts from 801,531 contracts from last Tuesday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during April decreased 5.6 per cent to 1.109 million tonnes compared with 1.175 million tonnes during March.
Another cargo surveyor, Societe Generale de Surveillance (SGS), reported that Malaysia’s palm oil exports during April decreased 6.8 per cent to 1.088 million tonnes compared with 1,168 million tonnes during March.
Overall, demand strengthened from Pakistan, while demand weakened from the European Union, China, India and the US.
Spot ringgit weakened on Friday to 4.006, ahead of April US non-farm payrolls, amid growing caution that a solid number could escalate possibilities of an US interest rate hike in the near term.
According to a Reuter’s survey, Malaysian crude palm oil exports in April could decline 6.2 per cent to 1.25 million tonnes, while Malaysian palm oil inventories are forecast to have hit a 14-month low in April in the absence of a sharp seasonal jump in output, although weak exports likely checked the drawdown in stockpiles.
Malaysian palm oil stocks in April are expected to drop 3.5 per cent to 1.82 million tonnes.
Finally Malaysian palm oil production is expected to increase eight per cent from the previous month, however a decline of 22 per cent from last year.
On Tuesday, the price fell for the fourth consecutive day, touching the lowest in nearly two months, due to poor export figures.
On Wednesday, the price rose, marking their sharpest jump in nearly five months, as traders covered short positions after four sessions of losses and as the ringgit sunk to its weakest in five weeks.
On Thursday, the price reversed earlier losses to climb for the second consecutive day, hitting the highest in a week, due to a weakening ringgit.
On Friday, the price climbed for the third consecutive day, due to tracking a rebound in competing vegetable oils.
Technical analysis
According to the weekly FCPO chart, the price opened below the middle Bollinger band and psychological barrier at 2,600.
By the end of the week the price tested the middle Bollinger band and psychological barrier at 2,600, closing above.
On Tuesday, the price opened below the bottom Bollinger band and psychological barrier at 2,700, while the SO remained in oversold territory.
A downside gap was formed from 2,670 to 2,690, which if able to be covered, could indicate potential to test resistance level 2,700.
By the later session, the previous gap was unable to be covered, while the price tested the bottom Bollinger band and support level at 2,550, closing below.
On Wednesday, the price opened below the bottom Bollinger band and support level at 2,550.
An upside gap was formed from 2,540 to 2,550, which if covered, could indicate a potential to close below the bottom Bollinger band and support level at 2,550.
By mid-day, the previous gap was covered, while the price tested the bottom Bollinger band and support level at 2,550, closing above.
During the later session, the price tested the psychological barrier at 2,600, closing above, while the SO remained in oversold territory.
The price is attempting to cover the previous downside gap from 2,635 to 2,600, created on April 27, which if able to be covered, could indicate potential to test the resistance level at 2,650.
On Thursday, the price opened above the bottom Bollinger band and psychological barrier at 2,600, while the SO exited oversold territory.
By the later session, the price closed above the bottom Bollinger band and psychological barrier at 2,600. The previous downside gap from 2,635 to 2,600 was covered, which could indicate potential to test the resistance level at 2,650.
On Friday, the price opened below the middle Bollinger band and psychological barrier at 2,600.
A downside gap was formed from 2,590 to 2,635, which if able to be covered, could indicate potential to test the middle Bollinger band and resistance level at 2,650 in the near term.
By the later session, the previous gap was covered, while the price tested the psychological barrier at 2,600, closing above.
In the coming week, the price has potential to range between 2,550 and 2,700. Resistance lines will be placed at 2,690 and 2,750, while support lines will be positioned at 2,590 and 2,550, these levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS report released on May 10 (Tuesday). MPOB report released on May 10 (Tuesday).
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.