Malaysian palm oil futures fell and closed at 2,734, tracking weakness in rival oil market while traders remained caution ahead of the US presidential elections on Tuesday.
Crude palm oil futures (FCPO) benchmark January 2016 contract settled at 2,736 on Friday, down 52 points or 1.8 per cent from 2,788 last Friday.
Trading volume decreased to 155,754 contracts from 214,642 contracts from last Monday to Thursday.
Open interest based decreased to 786,145 contracts from 797,659 contracts from last Monday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during October fell 6.5 per cent to 1.289 million tonnes compared with 1.378 million tonnes during September.
Socete Generale de Surveillance’s (SGS) report showed that Malaysia’s palm oil exports during October fell 5.1 per cent to 1.296 million tonnes compared with 1.366 million tonnes during September.
Overall, demand increased from Europe Union while demand remained weak from India and China. Spot ringgit has weakened 0.2 per cent to 4.1970 on on weaker-than-expected September exports data and lingering concerns about a contentious US presidential election race.
According to an email sent by the Malaysian Palm Oil Board to industry participants, Malaysia will implement higher biodiesel mandates for transportation and industrial sector from December 1.
Reuters’s survey showed ahead of MPOB monthly report that Malaysia’s palm oil inventories likely recorded their sharpest monthly gains in over a year in October, with declining exports outpacing a marginal rise in production.
On Monday, the price fell as lower export expectation weighed on palm oil price. On Tuesday, the price fell and hitting their lowest point in more than a week as tracking competing vegetable oil markets losses.
On Wednesday, the price recovered from their lowest point in more than a week as market correction and profit taking.
On Thursday, the crude palm oil market rose for second consecutive day as market gained support from a plan to roll out a higher biodiesel mandate.
On Friday, the price fell as tracking rival oil markets losses while traders remained caution ahead of the US presidential elections next Tuesday.
Technical analysis
According to the weekly FCPO chart, weekly candlestick opened lower and retraced back from the upper Bollinger Band.
By the end of the week, the upper and middle Bollinger Band continued moving upward which could signal that uptrend could remain in short term.
On Monday, the price fell as MACD histograms showed a decreasing sign which could signal that momentum is slowing down in the current uptrend.
On Tuesday, the price fell as MACD showed a potential bearish crossover above zero line which could indicate current price could stay significantly weak in the short term.
On Wednesday, the price rose as current market supported by the middle Bollinger Band while MACD potential bearish sign remained and should be monitored closely.
On Thursday, the price rose while the upper Bollinger Band showed moving downward sign. MACD showed bearish crossover which could signal that current price may stay significant weak in short term.
On Friday, the price fell as market continue to approach the middle Bollinger Band and the middle band should be monitored closely to provide further indication on next market direction.
In the coming week, the price has potential to range between 2,850 and 2,650. Resistance lines will be placed at 2,850 and 2,810, support lines will be positioned at 2,680 and 2,650, these levels will be observed in the coming week.
Major fundamental news this coming week
MPOB, ITS and SGS report released on November 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.