Malaysian palm oil futures slumped on Thursday and continued to trade lower on Friday, as related edible oils weakened and demand slowed.
Crude palm oil futures (FCPO) benchmark June 2017 contract settled at 2,754 on Friday, dropped 48 points or 1.71 per cent from 2,803 on last Friday.
Trading volume dropped 28.41 per cent to 193,316 contracts from 270,024 contracts from last Monday to Thursday, due to a rollover that occurred during the week.
Open interest rose 4.92 per cent to 835,164 contracts from 796,001 contracts from last Monday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during March 1 to 20 dropped three per cent to 711,286 tonnes from 733,288 tonnes during February 1 to 20.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil product export for March 1 to 20 fell 7.89 per cent to 686,741 tonnes from 745,564 tonnes shipped during February 1 to 20.
The shipments of palm oil to China decreased during the first 20 days of the month compared to the same period of the month before.
However, another two large importers of Malaysian palm oil, India and European Union, were seen buying more palm oils, especially India, which caused import of palm oils to rise ahead of the Muslim holy month of Ramadan in late May.
Spot ringgit ended slightly higher at 4.43 against the US dollar as the US Federal Reserve’s (Fed) were expected to raise rate gradually by sticking to their outlook for two more rate hikes this year and three more in 2018.
On Monday, Malaysian palm oil futures slipped to a second session of declines after four consecutive gains on weaker export data while March output is expected to improve from a month ago.
On Tuesday, palm oil futures rebounded from a three-day low to chart their strongest daily gain in a week, tracking stronger soyoil prices and supported by forecasts of weaker output.
On Wednesday, Malaysian palm oil hit a near two-week high, marking a second straight day of gains amid an uncertain production outlook and forecasts of a soyoil rally.
On Thursday, palm oil futures registered their sharpest daily fall in nearly two weeks, weighed down by weaker-performing related edible oils and a technical sell-off.
On Friday, Malaysian palm oil futures fell to their lowest in a week, tracking weaker performing related oils.
Technical analysis
According to the weekly FCPO chart, candlesticks had fallen below the previous week’s opening price of 2,770 but it managed to close at 2,755, its first weekly support level.
On Monday, the market edged down after four consecutive days of gains, closing at 2,778 or 25 points lower than the previous close.
On Tuesday, the market continued its previous rally after a pullback, and closed at 2,811, 31 points higher than Monday’s closing price.
On Wednesday, the market rose 16 points, opened at 2,825 and closed two points higher than open price after it retested the 2,800 psychological price level.
On Thursday, the market slumped, and closed at 2,771 which was 58 points lower than the previous day after it failed to stay about the 2,810 price level.
On Friday, market traded lower, down 16 points from the previous day and closed at 2,755 which is the first support level of this week.
In the coming week, market might try to test 2,794 and would most probably trade in the range of 2,660 to 2,840.
Resistance lines will be placed at 2,812 and 2,872, support lines will be positioned at 2,793 and 2,651, these levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS reports will be released on March 25 and 27.
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.