Malaysian palm oil futures edged lower on Friday to 2,580, due to lower export data showed in industry regulator report and weighed on market sentiment.
Future Crude Palm Oil (FCPO) benchmark August 2016 contract settled at 2,580 on Friday, down 85 points or 3.2 per cent from 2,665 last Friday.
Trading volume increased to 215,432 contracts from 179,325 contracts from last Monday to Thursday.
Open interest based decreased to 1.064 million contracts from 1.084 million contracts from last Monday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during June 1 to 10 decreased 5.9 per cent to 368,316 tonnes compared with 391,222 tonnes during May 1 to 10.
Societe Generale de Surveillance (SGS) report showed that Malaysia’s palm oil exports during June 1 to 10 decreased 10.3 per cent to 362,486 tonnes compared with 404,248 tonnes during May 1 to 10.
Overall, demand strengthened from Pakistan, while demand weakened drastically from India.
Spot ringgit weakened on Friday to 4.0640, due to caution grew ahead of the US Federal Reserve’s policy meeting and the Brexit vote.
The Malaysian Palm Oil Board (MPOB) reported that inventories at the end of May fell 8.8 per cent to 1.65 million tonnes from 1.8 million tonnes at the end of April, while exports rose 9.3 per cent on Ramadan demand and output rose by 4.9 per cent from the previous month to 1.36 million tonnes in May.
On Monday, the price retraced from two sessions of gains to trade lower, as the ringgit strengthened to its strongest level in more than a week and as expectations of lower post-Ramadan demand hit sentiment.
On Tuesday, the price fell for the second consecutive day, touching a one-week low, under pressure from a stronger ringgit and softer crude oil.
On Wednesday, the price declined for the third consecutive day, touching the lowest in nearly two weeks, as the ringgit remained at its strongest level for nearly three weeks.
On Thursday, the price rebounded higher after hitting the lowest a near two-week low during the previous day, on expectations government data on exports, scheduled for release on Friday, would be bullish.
On Friday, the price consolidated with a tight trading range in earlier session and retrace lower after industry regulator MPOB report showed a lower export data and weighed on market sentiment.
Technical analysis
According to the weekly FCPO chart, the price opened above the middle Bollinger band and psychological barrier at 2,600. By the end of the week, the price broke the middle Bollinger band and psychological barrier at 2,600, closing below.
On Monday, the price opened and closed above the middle Bollinger band and psychological barrier at 2,600. A downside gap was formed from 2,655 to 2,665, which if able to be covered, could indicate potential to test resistance level 2,690. By the later session, the previous gap was covered, while the SO remained in overbought territory.
On Tuesday, the price opened above the middle Bollinger band and psychological barrier at 2,600.
An upside gap was formed from 2,660 to 2,670, which if able to be covered, could indicate potential to test previous day low at 2,645. By the later session, the previous gap was covered, and the price tested the psychological barrier at 2,600, closing below, while the SO remained in overbought territory.
On Wednesday, the price opened above the middle Bollinger band and psychological barrier at 2,600, while the SO exited overbought territory.
An upside gap was formed from 2,600 to 2,610, which if able to be covered, could indicate potential to test the middle Bollinger band.
By the later session, the previous gap was covered, and the price tested the middle Bollinger band, closing above, and tested support level at 2,590, closing below.
On Thursday, the price opened above the middle Bollinger band and psychological barrier at 2,600. An upside gap was formed from 2,590 to 2,605, which if able to be covered, could indicate potential to test middle Bollinger band. B
y the later session, the previous gap was unable to be covered, while the price tested the support level at 2,590, closing above.
On Friday, the price opened above the middle Bollinger band and attempt to test the psychological barrier at 2,600.
By the later session, price retrace back from the psychological barrier at 2,600 and well support and closed exactly at the middle Bollinger band.
In the coming week, the price has potential to range between 2,490 and 2,650. Resistance lines will be placed at 2,650 and 2,705, while support lines will be positioned at 2,535 and 2,490, these levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS report released on June 15 (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.