Crude Palm Oil Weekly Report – 25 February 2017

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ta05286Malaysian palm oil futures broke a new low on strengthening ringgit and expectations of improving production, above 2,750 price level.

Crude palm oil futures (FCPO) benchmark May 2017 contract settled at 2804 on Friday, losses 54 points or 0.18 per cent from 2858 last Friday.

Trading volume increase to 339,729 contracts from 253,211 contracts from last Monday to Thursday.

Open interest based increased to 870,220 contracts from 810,152 contracts from last Monday to Thursday.

Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during February 1 to 20 fell 0.8 per cent to 733,288 tonnes from 739,367 tonnes  during January 1 to 20.

Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil product export for February 1 to 20 rose 1.7 per cent to 745,564 tonnes from 733,002 tonnes shipped during January 1 to 20.

Spot ringgit ended higher against the US dollar as investors’ interest shifted away from the greenback, following the release of the US Federal Reserve’s (Fed) meeting minutes.

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, palm oil futures dropped to its lowest since mid-November as slowing demand and expectations of higher supplies weighed on the market.

On Tuesday, reached new low as expectations of higher production and ample supplies of rival soybean oil weighed on the market.

On Wednesday, palm oil price rose as bargain hunters shrugged off market expectations of higher supplies and weak demand.

On Thursday, Malaysian palm oil futures charted a fifth session of losses, hitting their lowest in nearly four months as concerns persisted over rising production and weak exports.

On Friday, Malaysian palm oil futures recovered on forecasts of stronger export data and short-covering ahead of the weekend.

 

Technical analysis

According to the weekly FCPO chart, candlesticks fell lower but manage to hold above 2,764 for several times, potentially forming bottom.

On Monday, market fell deeper, with high potential to reach 2,790 price level before forming bottom.

On Tuesday, market fell deeper and reached a new low of 2,777. The next candlestick is critical to decide whether bottom could be formed or market would continue to fall deeper.

On Wednesday, fell deeper and reach new low of 2,763, but managed to close at an intraday high, fueling speculation for a rebound.

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

On Friday, the market repeated its previous candlestick pattern and rebounded during the last trading hour, but it did not break above 2,825 price level to confirm forming bottom and rebound.

In the coming week, the market might try to form bottom near to 2,760 and stage for rebound.

Resistance lines would be placed at 2,921 and 2,867, support lines would be positioned at 2,712 and 2,670, these levels will be observed in the coming week.

 

Major fundamental news this coming week

ITS and SGS report released on February 27 (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.