Crude Palm Oil Weekly Report – November 26, 2016

ta04602Malaysian palm oil futures rose for fifth consecutive day at 3,031 on Friday as market continue underpinned by a weaker ringgit and lower output expectations. Crude palm oil futures (FCPO) benchmark February 2016 contract settled at 3,032 on Friday, up 163 points or 5.7 per cent from 2,869 last Friday.

Trading volume decreased to 131,712 contracts from 218,437 contracts from last Monday to Thursday.

Open interest based increased to 785,954 contracts from 783,590 contracts from last Monday to Thursday.

Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during November 1 to 25 fell 9.6 per cent to 895,625 tonnes compared with 990,939 tonnes during October 1 to 25.

Socete Generale de Surveillance (SGS) report showed that Malaysia’s palm oil exports during November 1 to 25 fell 10.3 per cent to 895,077 tonnes compared with 998,101 tonnes during October 1 to 25.

Overall, demand strengthened from Europe while demand weakened simultaneously from European Union and India. Spot ringgit hit a 17-year low to 4.4530 against the dollar on Friday as higher US Treasury yields prompt global investors to dump regional assets.

Indonesia trade ministry said on Tuesday that Indonesia will kept the export tax for crude palm oil at zero for a second month.

US Environmental Protection Agency released targets for total renewable fuel use for 2017 that should raise the amount of soy-based biodiesel needed to meet the mandate.

Leading industry analyst Dorab Mistry said on Friday that palm oil prices may rise 10 per cent from current levels by the first quarter of 2017, before declining again as stockpiles recover.

On Monday, the market hits more than a one-week high on Monday, tracking stronger performing rival oils markets and supported by a weaker ringgit.

On Tuesday, the price closed unchanged on Tuesday as market remained cautious ahead export report while the market remained supported by rival oil markets gains.

On Wednesday, the price rose ahead of the Indonesian Palm Oil Conference while market remained supported by a weaker ringgit.

On Thursday, the crude palm oil market hit a four-year high as tracking CBOT soybean oil markets rally on latest US government biodiesel requirements.

On Friday, the price rose for fifth consecutive day on lower output expectation and market remained underpinned by a weaker ringgit.

 

Technical analysis

According to the weekly FCPO chart, weekly candlestick opened higher as Bollinger Bands continued heading upward which could indicate that current uptrend could remain in long term.

By the end of the week, the current price attempted to test upper band while market closed at upper band and stay away from overbought condition.

On Monday and Tuesday, the price rose as the upper and middle Bollinger Band continued heading upward which could indicate that continuation of current uptrend in long term.

Bollinger Bands showed expanding sign and potentially indicate that current uptrend momentum and price volatility could increase. MACD showed flat direction which could provide indecision signal for next market direction in short term.

On Wednesday, the price rose while MACD showed refuse sign on bearish crossover which could indicate that current uptrend momentum could remain for palm oil market.

On Thursday, the price fell as market retraced back from the upper Bollinger Band and stay away from overbought condition. MACD continue to show a refuse sign on bearish crossover.

On Friday, the price rose while current market remained under pressure by the upper Bollinger Band. MACD histograms continue increase after a bearish crossover refuse sign and indicate that current uptrend movement could remain.

In the coming week, the price has potential to range between 3,145 and 2,904.  Resistance lines will be placed at 3,145 and 3,090, support lines will be positioned at 2,904 and 2,860, these levels will be observed in the coming week.

 

Major fundamental news this coming week

ITS and SGS report released November 30 (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.

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