Malaysian palm oil futures posted third consecutive day losses and closed at 3,076 on Friday as market weighed by stronger ringgit and rival oil markets losses while market underpinned by bullish sentiment on upcoming industry regulator report.
Crude palm oil futures (FCPO) benchmark March 2016 contract settled at 3,075 on Friday, down 34 points or 1.1 per cent from 3,109 last Friday.
Trading volume increased to 117,431 contracts from 116,877 contracts from last Monday to Thursday.
Open interest based decreased to 603,435 contracts from 606,701 contracts from last Monday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during December fell 5.7 per cent to 1.087 million tonnes compared with 1.153 million tonnes during November.
Socete Generale de Surveillance’s (SGS) report showed that Malaysia’s palm oil exports during December fell 1.8 per cent to 1.11 million tonnes compared with 1.13 million tonnes during November.
Overall, demand strengthened from Europe and India while demand decreased from China. Spot ringgit strengthening to 4.4710 on Friday as Malaysia’s exports increased significantly in November compared to market expectation while market remained in caution mode ahead of US jobs data.
Reuters’s survey showed on Friday that Malaysia’s palm oil inventories likely dropped in December for the first time in four months, as a sharp decline in production outpaced a slower fall in exports.
On Monday, Bursa Malaysia Derivatives market closed on January 2, 2017 due to New Year’s Day.
On Tuesday, the market rose to two-week high, tracking rival oil market gains and market remained underpinned by a weaker ringgit.
On Wednesday, the crude palm oil market fell, tracking Dalian vegetable oil markets losses while tight supplies underpinned the market and curbed further losses.
On Thursday, the price fell for second consecutive day, tracking Dalian vegetable oil markets losses and a strengthening ringgit weighed on market bearish sentiment. On Friday, the market fell and hitting two-week low, weighed by stronger ringgit and rival oil markets losses while market underpinned by bullish sentiment on upcoming MPOB report.
Technical analysis
According to the weekly FCPO chart, weekly candlestick opens higher as the Bollinger Bands continued moving upwards, providing an uptrend signal in the long term. By the end of the week, MACD histogram value showed a decreasing sign which could indicate that buying momentum is lowing down.
On Monday, Bursa Malaysia Derivatives market closed on January 2, 2017 due to New Year’s Day.
On Tuesday, the price rose as market broke the middle band while Bollinger Bands showed a narrowing sign which could provide decreasing signal in price volatility. On Wednesday, the price rose while market continue to approach the middle band while a daily ‘Doji’ candlestick pattern could indicate indecision signal for current market direction in short term.
On Thursday, the price fell as market broke middle band and provide bearish signal for current market. A daily bearish ‘Engulfing’ candlestick pattern may enhance bearish sentiment for current market in short term.
On Friday, the price fell as the Bollinger Bands start to heading downward which could provide bearish signal for current market in short term while market remained underpinned by lower band.
This coming week, the price has potential to range between 3,190 and 2,950. Resistance lines will be placed at 3,190 and 3,135, support lines will be positioned at 3,015 and 2,950, these levels will be observed in the coming week.
Major fundamental news this coming week
ITS, SGS and MPOB report released on January 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.