Malaysian palm oil futures rose to their highest in more than four years at 2,976 on Friday as supported by a weaker ringgit and bullish industry regulator report.
Crude palm oil futures (FCPO) benchmark January 2016 contract settled at 2,974 on Friday, up 238 points or 8.7 per cent from 2,736 last Friday.
Trading volume increased to 168,168 contracts from 155,754 contracts from last Monday to Thursday.
Open interest based increased to 829,584 contracts from 786,145 contracts from last Monday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during November 1 to 10 fell 15.6 per cent to 355,065 tonnes compared with 421,044 tonnes during October 1 to 10.
Socete Generale de Surveillance’s (SGS) report showed that Malaysia’s palm oil exports during November 1 to 10 fell 13.9 per cent to 347,760 tonnes compared with 403,650 tonnes during October 1 to 10.
Overall, demand increase from Europe Union while demand remained weakened from India and China. Spot ringgit has weakened to 4.28 on Friday as the fallout from Donald Trump’s surprise US election victory spoilt the day for a country reporting that its economy was finally perking up.
According to data from industry regulator the Malaysian Palm Oil Board (MPOB) on Thursday, stockpiles in Malaysia rose 1.8 per cent from September to October to 1.57 million tonnes.
MPOB report showed on Thursday that output declined 2.2 per cent to 1.68 million tonnes while exports fell 1.4 per cent to 1.37 million tonnes.
On Monday, the price rose as supported by a weaker ringgit while traders remained cautious ahead of the U.S. presidential elections on Tuesday.
On Tuesday, the price hit their highest in more than two years as tracking rival oil markets gains while traders remained cautious ahead of the US presidential elections.
On Wednesday, the price closed mostly unchanged as market remained cautious ahead of industry regulator report.
On Thursday, the crude palm oil market rose to their highest levels in over two and a half years as tracking rival oil markets gains and bullish industry regulator report underpinned the market.
On Friday, the price rose to their highest in more than four years as supported by a volatile ringgit and gains in rival oil market boost the bullish sentiment.
Technical analysis
According to the weekly FCPO chart, weekly candlestick opened higher as the upper and middle Bollinger Band continue moving upward which could signal that uptrend could remain in short term. By the end of the week, market closed above the upper Bollinger Band which could signal that the current market stayed at overbought condition.
On Monday, the price rose as the middle Bollinger Band remained supported by the market. MACD potentially showed bullish crossover above zero line while a crossover might indicated that market could stay in an uptrend momentum.
On Tuesday, the price rose as the upper Bollinger Band provided significant resistance for the current market while MACD showed bullish crossover above zero line which indicated that the market could stay in an uptrend momentum.
On Wednesday and Thursday, the price rose as the middle and upper Bollinger Band continued heading upward while MACD histograms continued to increase and provided an increasing indication that the current uptrend momentum would continue.
On Friday, the price rose and closed above the upper Bollinger Band which could provide indication that the current market stayed at overbought condition. A ‘shooting star’ candlestick pattern should be monitored closely to confirm uptrend correction in short term.
In the coming week, the price has potential to range between 3,135 and 2,800. Resistance lines will be placed at 3,070 and 3,135, support lines will be positioned at 2,915 and 2,800, these levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS report released on November 15 (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.