Malaysian palm oil futures reversed last week gains and traded slightly lower as India import tax hike hits sentiment, despite supported by expectation of rising demand and stronger performances by rival edible oils on Chicago Board of Trade (CBOT).
The benchmark crude palm oil futures (FCPO) contract down 0.07 per cent to 2,682 ringgit on Friday, which is RM2 lower than RM2,684 during the previous week. The total trading volume from Monday to Thursday rose 3.17 per cent with 193,894 contracts traded, comparing with 187,939 contracts traded during last Monday to Thursday.
Total open interest from Monday to Thursday increased 0.15 per cent to 841,908 contracts from 840,667 contracts during last Monday to Thursday.
Intertek Testing Services (ITS) reported that export of Malaysian palm oil products for August 1 to 15 dropped 14.58 per cent to 512,039 tonnes, from 599,414 tonnes shipped during July 1 to 15.
Societe Generale de Surveillance (SGS) reported that export of Malaysian palm oil products during August 1 to 15 fell 12.77 per cent to 537,002 tonnes from 615,671 tonnes shipped during July 1 to 15.
According to data from cargo surveyors, Malaysian palm oil exports for the first half of August fell compared with the corresponding period in July.
India, the world’s biggest buyer of vegetable oils, announced an increase in import taxes on crude and refined edible oils to protect local oilseed farmers from cheaper imports from top suppliers Malaysia and Indonesia on last Friday.
Spot ringgit appreciated 0.15 per cent to 4.2885 against the US dollar this week, compared to 4.2950 on last Friday.
The common currency had dropped after Reuters reported sources saying European Central Bank president Mario Draghi will not deliver a new policy message at his planned August 25 speech in the US Federal Reserve’s Jackson Hole conference.
On Monday, Malaysian palm oil futures fell for the first time in five sessions as sentiment took a hit from India’s plans to raise import taxes on crude and refined edible oils.
On Tuesday, Malaysian palm oil futures slid to its steepest fall in a week, tracking a decline in exports and weaker performance among other related edible oils.
On Wednesday, Malaysian palm oil futures fell for a third straight day, tracking losses in soyoil overnight on the Chicago Board of Trade (CBOT).
On Thursday, Malaysian palm oil futures scored its first gain in four sessions, tracking stronger edible oils and lifted by tighter supplies.
On Friday, Malaysian palm oil futures rose for a second consecutive session, climbing by nearly one per cent, buoyed by expectations of a rise in demand and tracking gains in palm kernel oil prices.
Technical analysis
According to the FCPO daily chart, the market was trading inside the consolidation zone after it fell from the week-high of 2,696 as the market resisted at the psychological level of 2,700.
On Monday, Malaysian palm oil futures reversed its early gains and traded lower, with the benchmark contract closing at 2,663, which is 21 points lower than the previous closing price.
On Tuesday, Malaysian palm oil futures traded lower, with the benchmark contract closing at 2,631, which is 32 points lower than the previous closing price.
On Wednesday, Malaysian palm oil futures opened lower and rebounded back after hitting a one-week low, with the benchmark contract closing at 2,633, which is two points higher than the previous closing price.
On Thursday, Malaysian palm oil futures gapped up and traded higher, with the benchmark contract closing at 2,658, which is 25 points higher than the previous closing price.
On Friday, Malaysian palm oil futures erased its early losses and traded higher, with the benchmark contract closing at 2,682, which is 24 points higher than the previous closing price.
The Bollinger Bands width narrowed as price volatility declines. An upside band break might signal the start of a new bullish trend and volatility expansion.
Resistance lines will be positioned at 2,710 and 2,750, whereas support lines will be positioned at 2,600 and 2,550. These levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS reports will be released on August 21.
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.