Malaysian palm oil futures were on track for their second consecutive of gains after hitting an eight-month low on Wednesday, following higher expectations on demand ahead of the Ramadan month and the strengthening of related edible oils.
Benchmark crude palm oil futures (FCPO) for July delivery contract shed 0.94 per cent on Friday, closed at RM2,528, RM24 lower, compared to RM2,552 recorded last Friday.
Trading volume slightly increased to 241,074 contracts during Monday to Thursday, up 0.24 per cent from 240,503 contracts traded during the same period of previous week.
Open interest stood at 890,931 contracts during Monday to Thursday, down 0.30 per cent, compared to 893,481 contracts from last Monday to Thursday.
Intertek Testing Services (ITS) reported that shipment of Malaysia’s palm oil related products during April 1 to 20 declined 0.83 per cent to 705,372 tonnes, compared to 711,286 tonnes shipped during March 1 to 20.
Societe Generale de Surveillance (SGS) reported that the shipment of Malaysian palm oil related products during April 1 to 20 rose 4.72 per cent to 719,175 tonnes from 686,741 tonnes during March 1 to 20.
The shipment of Malaysian palm oil related products during the first twenty days of April was weaker than expected, as usually, the month ahead of Ramadan would see higher consumption of palm oil for cooking purposes in regions like the Middle East and India. However, data from cargo surveyors showed unvarying export of palm oil products to India compared with a month earlier.
Spot ringgit appreciated to 4.3980 against the US dollar, strengthening 0.2 per cent compared to last Friday, after US President Donald Trump remarked that he preferred the US interest rate to continue to stay low. Besides that, the global market is also cautious ahead of the first round of the French Presidential election.
On Monday, Malaysian palm oil futures lost early gains, sliding to an eight-month low in late trade, weighed down by expectations of rising output by top producers Malaysia and Indonesia.
On Tuesday, Malaysian palm oil futures fell, recording a fifth consecutive session of losses, weighed down by forecasts of rising output and tracking weaker performing rival oils.
On Wednesday, Malaysian palm oil futures hit an eight-month low, a sixth consecutive session of declines, tracking weaker related edible oils and on expectations of rising production and weaker exports.
On Thursday, Malaysian palm oil futures recorded its biggest daily gain in two weeks, ending six sessions of losses, tracking the strength in soyoil and supported by a technical correction.
On Friday, Malaysian palm oil futures were on track for their second consecutive session of gains, buoyed by stronger demand ahead of the Ramadan month and on a technical correction after sharp falls earlier this week.
Technical analysis
According to the FCPO chart, the market recovered the losses during late trade of the week after it hit the weekly support level at 2,450, the lowest level since August 11 on Wednesday.
On Monday, Malaysian palm oil futures extended its losses, with the benchmark month dropping to 2,495, the lowest level since September 1.
On Tuesday, Malaysian palm oil futures declined for a fifth consecutive day on Tuesday, closing 25 points lower than Monday’s closing price.
On Wednesday, Malaysian palm oil futures recorded its sixth consecutive day of losses, and closed at 2,465, eight points lower than the previous closing price.
On Thursday, Malaysian palm oil futures ended its sixth consecutive day of losses, with the active month closed at 2,504, 39 points higher than the previous closing price.
On Friday, Malaysian palm oil futures extended its gains, with the active month gaining 24 points. It closed at 2,528, five points higher than opening of the week.
In the coming week, market might continue its rebound to 2,600 and it would most likely trade in the range of 2,450 to 2,620. Resistance lines will be positioned at 2,600 and 2,640, whereas support lines would be positioned at 2,450 and 2,400, these levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS reports will be released on April 25.
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.