Malaysian palm oil futures went into consolidation mode after hitting an eight-month low last week due to low demand and weak participation ahead of a long weekend and pending data announcements.
Benchmark crude palm oil futures (FCPO) for July delivery contract closed at RM2,505, slid 0.91 per cent on Friday, RM23 lower compared to RM2,528 last Friday.
As the Bursa Malaysia Derivative was closed on Monday and a rollover took place in the previous week, traded volume dropped to 157,111 contracts during Tuesday to Thursday, down 34.83 per cent, compared to 241,074 contracts traded last Monday to Thursday.
Open interest declined 25.5 per cent to 663,713 contracts from Tuesday to Thursday, compared to 890,831 contracts from last Monday to Thursday.
Intertek Testing Services’ (ITS) report showed that exports of Malaysian palm oil related products during April 1 to 25 declined 3.38 per cent to 866,297 tonnes from 896,621 tonnes shipped during March 1 to 25.
Societe Generale de Surveillance’s (SGS) report showed that exports of Malaysian palm oil related products during April 1 to 25 was down 1.21 per cent to 891,725 tonnes from 902,628 tonnes shipped during March 1 to 25.
According to the cargo surveyors’ data, the shipments of palm oil related products to India dropped compared to the corresponding period of the previous month, despite of the upcoming season of Ramadan, which should spur higher palm oil demand in the regions like the Middle East and India.
Spot ringgit appreciated to 4.34 against the US dollar this week, strengthening 1.32 per cent compared to last Friday, and year-to-date, it was up 3.22 per cent from 4.4845. Investors’ appetite shifted to emerging currencies after the much-awaited tax reform plans by US President Donald Trump failed to boost market confidence.
On Tuesday, Malaysian palm oil futures had their weakest intra-day performance in one week, snapping two straight sessions of gains as a stronger ringgit and concerns over rising production weighed on the market.
On Wednesday, Malaysian palm oil rebounded from earlier losses in the evening, rising for a third session, lifted by stronger performing soyoil and in a technical correction.
On Thursday, Malaysian palm oil futures reversed gains on Thursday evening as the market took profit after hitting a two-week high.
On Friday, Malaysian palm oil futures were slightly higher on Friday evening, reversing losses from earlier in the day due to low demand, pending the release of data and ahead of the long weekend.
Technical analysis
According to the FCPO chart, the market was trading in a consolidation zone after it hit the weekly support level at 2,450, the lowest level since August 11 last week.
On Tuesday, Malaysian palm oil futures wiped out last Friday’s gain, with the benchmark month dropping 44 points and closing at 2,486.
On Wednesday, Malaysian palm oil futures recovered from its previous session of decline, as the benchmark month gained 26 points and closed at 2,512.
On Thursday, Malaysian palm oil futures declined in the afternoon session, down seven points to close at 2,505 on Thursday.
On Friday, Malaysian palm oil future traded flat, with the active month closed at 2,505 and remained unchanged from Thursday’s closing price.
This coming week, the market might continue to test the weekly support at 2,450, breaking this level will lead the market fall further to 2,400 and it would most likely trade in the range of 2,400 to 2,560.
Resistance lines will be positioned at 2,573 and 2,630, whereas support lines will be positioned at 2,400 and 2,370, these levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS reports will be released in between April 30 and May 2.
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.