Malaysian palm oil futures pared gains after four consecutive sessions of decline and after recording a seven-week peak, aided by rival oilseed soy’s gains on the Chicago Board of Trade (CBOT) and Dalian Commodity Exchange, on expectations that data from cargo surveyors to be released on Saturday and Monday will show higher exports.
The benchmark crude palm oil futures (FCPO) contract up 0.46 per cent to RM2,566 on Friday, which is RM12 higher than RM2,554 during the previous week.
The total trading volume during Monday to Thursday up 7.94 per cent with 162,132 contracts traded, compared with 150,209 contracts traded during last Monday to Thursday.
Total open interest during Monday to Thursday increased 2.5 per cent to 854,674 contracts from 876,547 contracts during last Monday to Thursday.
Intertek Testing Services (ITS) reported that export of Malaysian palm oil products during July 1 to 10 dropped 1.87 per cent to 360,114 tonnes from 366,994 tonnes shipped during June 1 to 10.
Societe Generale de Surveillance (SGS) reported that export of Malaysian palm oil products during July 1 to 10 rose 3.8 per cent to 381,241 tonnes from 367,165 tonnes shipped during June 1 to 10.
Monthly data from industry regulator, Malaysia Palm Oil Board (MPOB) showed that palm oil production has declined 8.48 per cent to 1.514 million tonnes due to the Ramadan and Eid-al-Fitr holidays as plantation workers go on leave.
Due to the declining demand of palm oil, exports have decreased 8.39 per cent to 1.38 million tonnes as the usage of palm oil turned weak until the next major festive occasion, which is the Diwali festival in October. As a result, the inventories dropped 1.93 per cent to 1.527 million tonnes from 1.557 million tonnes in May.
Spot ringgit appreciated 0.07 per cent to 4.2955 against the US dollar, compared with 4.2985 on last Friday.
The US currency’s recent advance, notably against the yen, has stalled towards the end of this week as Federal Reserve chair Janet Yellen curbed some of the monetary tightening expectations that had supported the greenback.
On Monday, Malaysian palm oil futures hit its highest in six weeks, aided by rival oilseed soy’s gains on the Chicago Board of Trade (CBOT) and China’s Dalian Commodity Exchange.
On Tuesday, Malaysian palm oil futures fell from a seven-week high during the early trade, as traders sold on expectations of a rising production for the month of July.
On Wednesday, Malaysian palm oil futures gave up early gains to close slightly lower, tracking weakness in related edible oils in Chicago and on China’s Dalian Commodity Exchange.
On Thursday, Malaysian palm oil futures suffered the sharpest drop in three weeks on Thursday evening after a third straight session of losses, tracking weaker edible oils such as soyoil on the CBOT.
On Friday, Malaysian palm oil futures snapped three sessions of losses, rising off a one-week low on expectations that data from cargo surveyors would show higher exports.
Technical analysis
According to the FCPO daily chart, the market pulled back after hitting the psychological price level at 2,600 and achieved the three-week peak at 2,614. After three consecutive days of losses, the market held at the support level of 2,530 and rebounded slightly on Friday.
On Monday, Malaysian palm oil futures market gapped up and traded higher. The benchmark contract gained 38 points and ended the day at 2,592 which is the highest level since May 26, 2017.
On Tuesday, Malaysian palm oil futures market pared its early gains and ended lower, the benchmark contract lost 11 points to close at 2,581.
On Wednesday, Malaysian palm oil futures market ended marginally higher, with the benchmark contract gained one point to close at 2,582.
On Thursday, Malaysian palm oil futures gapped down and traded lower, with the benchmark contract fell 19 points to close at 2,553.
On Friday, Malaysian palm oil futures gapped down and traded higher, with the benchmark contract gained 13 points to close at 2,566.
According to the chart above, the market pulled back from the upper Bollinger band and headed towards the middle band.
A successful breakthrough of the middle Bollinger band might indicate a weakening of the upward pressure of the trend. The market might hover around the middle band.
Resistance lines will be positioned at 2,615 and 2,659, whereas support lines will be positioned at 2,500 and 2,465. These levels will be observed in the coming week.
Major fundamental news this coming week
ITS, SGS reports will be released on July 17.
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.