Malaysian palm oil futures rebounded on Friday after falling earlier in the session.
It settled above 2,800 on the expectations of improving demand and stronger soyoil. Crude palm oil futures (FCPO) benchmark June 2017 contract settled at 2,803 on Friday, gaining 81 points or 2.98 per cent from 2,722 on last Friday.
Trading volume increased 68.68 per cent to 270,024 contracts from 160,079 contracts from last Monday to Thursday, due to a rollover which occurred during the week.
Open interest increased 2.85 per cent to 796,001 contracts from 773,920 contracts from last Monday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during March 1 to 15 fell 5.5 per cent to 492,321 tonnes from 520,962 tonnes during February 1 to 15.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil product export for March 1 to 15 rose 1.14 per cent to 507,491 tonnes from 501,748 tonnes shipped during February 1 to 15.
India, the largest importer of Malaysian palm oil, is seen buying more palm oils ahead of the Muslim holy month of Ramadan which will occur later in May.
Besides that, shipments of palm oil products to European Union (EU) more than doubled in the first half of March from the same period of the previous month.
Spot ringgit ended slightly higher at 4.4440 against the US dollar as the US Federal Reserve’s (Fed) said in its policy statement that further hikes would only be “gradual”, with officials sticking to their outlook for two more rate hikes this year and three more in 2018.
According to Malaysia Palm Oil Board (MPOB)’s data, Malaysian palm oil production in February fell to its lowest since March 2016, the fifth consecutive monthly drop.
The export tax of crude oil in March lowered to 7.5 per cent from eight per cent on Tuesday.
On Monday, Malaysian palm oil futures fell for a third consecutive session to reach the weakest level in more than four months, tracking declining soyoil on the evening.
On Tuesday, palm oil futures rebounded from a near five-month low to gain in the later trade, supported by expectations of stronger demand ahead of a cargo surveyor data release.
On Wednesday, palm oil price continued its rally, the strongest daily rise in four months on support from improving exports and strong physical prices.
On Thursday, Malaysian palm oil futures marked its third consecutive gains, driven by improving exports and lower that production forecasts, despite a strengthening ringgit, which typically weighs on prices. On Friday, Malaysian palm oil futures closed slightly higher on expectation of stronger export data.
Technical analysis
According to the weekly FCPO chart, candlesticks had fallen marginally below 2,700 this week but it still managed to hold above 2,800 on Friday.
On Monday, the market fell deeper, the FCPO active month contracted and closed lower at 51, extending its losses for the third consecutive day.
On Tuesday, the market dropped marginally below 2,700 psychology price level before it closed higher on Tuesday after three consecutive days of losses.
On Wednesday, the market continued its second day of rebound after it hit its five-month low during the previous day.
On Thursday, a huge price gap was created due to price differences between May 17 and June 17.
However, the market continued its rally. On Friday, the market carried on its previous candlestick pattern during the late trade, marking its four consecutive daily gains.
In the coming week, market might reach 2,870 and it would most probably trade in the range of 2,720 to 2,890.
Resistance lines will be placed at 2,853 and 2,898, while support lines are positioned at 2,755 and 2,697. These levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS report to be released on March 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.