Malaysian palm oil futures wiped off the strongest daily gains over five months before the week ended, ahead of official data from the Malaysian Palm Oil Board (MPOB) this coming Monday, after tracking down weakness in rival edible oils derived from concerns of ample global soybean supplies.
Benchmark crude palm oil futures (FCPO) for June delivery contract closed at RM2,655 per tonne on Friday, rose RM8 or 0.3 per cent, compared to RM2,647 on Friday.
Trading volume rose 2.32 per cent to 199,315 contracts during Monday to Thursday, compared to 194,795 contracts traded in the same period of the previous week.
Open interest rose during Monday to Thursday was up 2.83 per cent to 870,043 contracts from 846,082 contracts from last Monday to Thursday. Export of Malaysian palm oil rose nearly seven per cent in March compared with the previous month. Data from Intertek Testing Services (ITS) showed a 6.77 per cent gain, while Societe Generale de Surveillance (SGS) showed 6.88 per cent gain.
The shipments of palm oil products to India and European Union showed signs of a pick up in March ahead of the Ramadan, month-long festivals at the end of May. Muslims in the region such as India and Middle East typically consume more palm oil during the month-long festival as they break the day-long fasting with meals and feasting.
According to a Reuters poll, upcoming data from Malaysia Palm Oil Board (MPOB) is forecast to show a 10.4 per cent increase in Malaysian palm oil output to 1.39 million tonnes in March. Palm oil inventory is expected to rise 0.1 per cent while the export is estimated to climb seven per cent from February, mainly due to stronger demand from India.
Spot ringgit slipped slightly to 4.4355 against the US dollar as US Federal Reserve’s March minutes showed that most policymakers think the central bank should take steps to trim its US$4.5 trillion balance sheet later this year as long as the economic data holds up.
On Monday, Malaysian palm oil futures rose from a near six-month low and snapped two sessions of losses as they gained strength from rival oilseed soy and a weaker production outlook.
On Tuesday, Malaysian palm oil futures hit a near six-month low, tracking rival soyoil on the Chicago Board of Trade which fell nearly one per cent overnight and ahead of the release of official output and export data this coming week.
On Wednesday, Malaysian palm oil futures clocked up their biggest daily gains in over five months during the late trade, tracking rival edible oils and on a bullish export outlook for April due to the Ramadan-season demand.
On Thursday, Malaysian palm oil futures retreated from a one-week high during the late trade on expectations of a rebound in production.
On Friday, Malaysian palm oil futures marked its sharpest drop after tracking rival soyoil which fell on concerns of rising output.
Technical Analysis
Based on the FCPO weekly chart, the gap between the opening and closing for this week is tiny, though the trading range for this week was 90 points and near to six month-low was marked this coming week.
On Monday, Malaysian crude palm oil markets recovered from more than five month-low, the active month contract closed at 2,663, 17 points higher than Friday’s close.
On Tuesday, palm oil market continued its previous session’s decline, the active month opened 15 points lower and closed at 2,632, down 30 points, compared to Monday.
On Wednesday, the FCPO market rebounded strongly from near to a six-month low, engulfed in the previous days’ candlesticks, as the benchmark contract gained 84 points from previous close and ended at day-high.
On Thursday, crude palm oil market retraced from its strong rebound, with the active month closed five points lower as the fall was hold by the intraday support at 2,694.
On Friday, Malaysian palm oil futures wiped off most of the gains this coming week, the active month contract dropped 53 points, ended the week at 2,655.
In the coming week, the market might try to test 2,600 and it is mostly traded in the range of 2,745 to 2,570.
Resistance lines will be positioned at 2,735 and 2,777, whereas support lines would be positioned at 2,574 and 2,537. These levels would be observed in the coming week.
Major fundamental news this coming week
MPOB, ITS and SGS reports will be released on April 10.
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.