Crude Palm Oil Weekly Report – 18 February 2017

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c_pc0019997Malaysian palm oil futures broke sideway price range and started a fresh round of downtrend on Thursday and Friday, following expectations of weaker demand from China and improving harvest at rival products.

Crude palm oil futures (FCPO) benchmark May 2017 contract settled at 2858 on Friday, losses 137 points or 4.5 per cent from 2995 last Friday.

Trading volume increased to 253,211 contracts from 140,989 contracts from last Monday to Thursday.

Open interest based increase to 810,152 contracts from 587,489 contracts from last Monday to Thursday.

Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during February 1 to 15 fell 3.1 per cent to 340,947 tonnes compared with 351,907 tonnes during January 1 to 15.

Socete Generale de Surveillance (SGS) reported that exports of Malaysian palm oil product export for February 1 to 15 fell 3.6 per cent to 501,748MT from 520,332MT shipped during January 1 to 15.

Spot ringgit closed nearly unchanged at 4.4510/4550 against the US dollar on steady crude oil prices, as well as positive guidance from Bank Negara Malaysia’s (BNM) Financial Markets Committee (FMC) data released.

The MPOB data showed a 7.6 per cent decline in end-stocks to 1.54 million tonnes while output for January fell 13.4 per cent from December to 1.28 million tonnes. Exports rose 1.2 per cent to 1.28 million tonnes.

On Monday, the market recorded a second straight session of decline, as prices were weighed down by prospects of improving production levels.

On Tuesday, market rebound from a three-month low on concerns about a decline in February production

On Wednesday, palm oil saw the strongest daily gains in nearly two weeks after hitting a near three-month low in the previous session, aided by positive export numbers.

On Thursday, Malaysian palm oil futures fell to their lowest in nearly three months on Thursday evening, weighed down by expectations of rising output and tracking weaker performing rival oils.

On Friday, Malaysian palm oil dropped to their lowest in three months, on expectations of rising production and weakening export demand.

Technical analysis

According to the weekly FCPO chart, candlesticks climbed higher earlier during the week but retraced back on the last trading day, which strengthened speculation of a continuance in sideway trend.

On Monday, palm oil futures fell to the bottom of the sideway price, showing signs of a fresh start to a downtrend.

On Tuesday, the market tested the bottom of the sideway price range but failed to break lower and instead, it rebounded.

On Wednesday, the market continued in a sideway price range with lower than usual traded volume.

On Thursday, a huge price gap formed due to price differences between April 17 and May 17 contract month.

On Friday, candlesticks fell deeper, creating the second price gap, confirming the start of a downtrend.

In the coming week, market might try to form bottom near to 2,800 and stage for rebound.

Resistance lines will be placed at 3,015 and 2,927, support lines would be positioned at 2,806 and 2,738, these levels will be observed in the coming week.

 

Major fundamental news this coming week

ITS and SGS report released on February 20 (Monday).

 

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.