Crude Palm Oil Weekly Report – March 11, 2017

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Malaysian palm oil futures fell further on mixed forecast by analysts during a major annual palm oil conference in Malaysia as well as on the basis of weakened export data.

Crude palm oil futures (FCPO) benchmark May 2017 contract settled at 2770 on Friday, dropped 93 points or 3.2 per cent from 2,863 last Friday.

Trading volume declined to 174,817 contracts from 256,194 contracts from last Monday to Thursday.

Open interest based dropped to 860,140 contracts from 861,761 contracts from last Monday to Thursday.

Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during March 1 to 10 fell 25.5 per cent to 254,141MT from 340,947MT shipped during February 1 to 10.

Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil product export for March 1 to 10 fell 25.7 per cent to 250,481MT from 337,282MT shipped during February 1 to 10.

The MPOB data showed a 5.3 per cent decline in end-stocks to 1.46 million tonnes while output for January fell 1.4 per cent from January to 1.26 million tonnes.

Exports dropped 14 per cent to 1.11 million tonnes.

On Monday, palm oil futures gained, heading toward a resistance at 2,900 to 2,898, which is a critical price level to help determine whether the market would be able to climb higher or start a retracement.

On Tuesday, Malaysian palm oil futures retraced for the day but it was lower than usual as traded volume suggested that the market was cautious and the direction could change rapidly due to announcements of fundamental news.

On Wednesday, the market rebounded after reaching a new low of 2,821, fueling speculations that the previous fall would more likely cause a retracement than a start of downtrend. On Thursday, palm oil prices dropped but held above the previous market low of 2,821, showing potential to rebound on the next candlestick.

On Friday, Malaysian palm oil futures showed little change during closing due to forecasts that February’s inventory levels could remain flat.

 

Technical analysis

According to the weekly FCPO chart, candlesticks fell lower and headed toward the previous market low of 2,723.

It could potentially rebound before reaching 2,700.

On Monday, the market fell sharply during the last trading hour and approached the previous market low of 2,743.

The price level could help determine whether the current support could form a strong bottom or stage a rebound.

On Tuesday, the market fell deeper and fell sharply until 2,723 but it managed to rebound above the observed price level of 2,740, strengthening the potential for the market to climb higher and rebound from the bottom.

On Wednesday, the market opened a gap up which supported previous speculation of the market staging a strong rebound.

On Thursday, the market climbed higher but there is a possibility of a retracement which could happen on next candlestick.

On Friday, the market fell sharply, tracking weakness in rival oils and on weak export data and mixed forecasts announced after a recent major palm oil industry conference.

Resistance lines could be at 2,901 and 2,849, while support lines would be positioned at 2,723 and 2,683, these levels, to be observed in the coming week.

 

Major fundamental news this coming week

ITS & SGS report released on March 15 (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.