Malaysian palm oil futures rallied from an eight-month low, rising for the second consecutive day on Friday, tracking a weaker performing ringgit and as traders short covered ahead of the weekend.
The benchmark palm oil futures (FCPO) contracts for July delivery closed at RM2,580, rose 2.99 per cent on Friday, RM75 higher, compared to RM2,505 last Friday.
Traded volume dropped to 100,771 contracts during Tuesday to Thursday, down 35.86 per cent, compared to 157,111 contracts traded during last Tuesday to Thursday.
Open interest increased 1.69 per cent to 674,916 contracts during Tuesday to Thursday, compared to 663,713 contracts from last Tuesday to Thursday.
Intertek Testing Services (ITS) reported that shipment of Malaysian palm oil related products in April rose 4.62 per cent to 1.126 million tonnes from 1.076 million tonnes shipped in March.
Societe Generale de Surveillance (SGS) reported that the export of Malaysian palm oil related products in April up 4.29 per cent to 1.135 million tonnes from 1.089 million tonnes shipped in March.
The shipments of palm oil related products softened in early April and picked up at the end of the month based on cargo surveyors’ data. Export demand to India and European Union improved due to the upcoming season of Ramadan at the rnd of May which would spur higher palm oil demand in the Muslim regions like the Middle East and India.
Spot ringgit appreciated to 4.3350 against the US dollar this week, strengthening 0.12 per cent compared to last Friday, and year-to-date it was up 3.34 per cent from 4.4845.
The ringgit opened lower against the US dollar on Friday as more investors shifted interest towards the greenback on possibility of another US interest rate hike in June.
On Tuesday, Malaysian palm oil futures rose in the evening for their second consecutive day of gains, helped by strong export data and firmer soyoil prices.
On Wednesday, Malaysian palm oil futures posted their biggest intraday drop in a week as the ringgit strengthened and made the vegetable oil more expensive for holders of other currencies.
On Thursday, Malaysian palm oil futures bounced back after recording its sharpest fall in a week during the previous session, helped by a weaker ringgit and stronger performing soyoil.
On Friday, Malaysian palm oil futures broke higher, reversing losses from earlier in the day due the weaker performing ringgit and as traders short covered ahead of the weekend.
Technical Analysis
According to the FCPO chart, the market finally traded outside the consolidation zone after the FCPO broke out of the sideways trend and moved higher towards 2,581, up 2.8 per cent for the week, its strongest weekly gains since December
On Tuesday, Malaysian palm oil futures went up during the opening bell and rallied, with the benchmark contracts up 38 points, closing at 2,546.
On Wednesday, Malaysian palm oil futures traded lower, as the active month plunged from day-high of 2,550, dropping 25 points and ended the day at 2,521.
On Thursday, Malaysian palm oil futures pared its early losses, ending the day at 2,534, 13 points higher than the previous closing price.
On Friday, Malaysian palm oil future hit an intra-day and three weeks high of RM2,581, with the active month closing at 2,580.
In the coming week, the market might continue to test the resistance at 2,600. Breaking this level could lead to the market rising further to 2,650 and it would most likely trade in the range of 2,500 to 2,700.
Resistance lines are positioned at 2,645 and 2,700, whereas support lines are positioned at 2,505 and 2,450. These levels will be observed this coming week.
Major fundamental news this coming week
ITS, SGS and MPOB reports will be released on May 10 and 11.
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.