Malaysian palm oil futures rebound from a six-month low on Friday, as market reacted to the news that Malaysia will lower its crude palm oil export tax to 5.5 per cent in January, from six per cent in December.
The benchmark crude palm oil futures (FCPO) contract rose 1.53 per cent to RM2,515 on Friday, which is RM38 higher than RM2,477 during the previous week.
The average daily trading volume during Monday to Thursday increased 32.24 per cent with a total of 227,176 contracts traded, as compared with 171,789 contracts traded during last Monday to Thursday.
However, daily open interest during Monday to Thursday edged up 0.04 per cent to 239,444 contracts from 239,839 contracts during last Monday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products for December 1 to 15 declined 9.6 per cent to 596,862 tonnes, from 660,465 tonnes shipped during November 1 to 15.
SocieteGenerale de Surveillance (SGS) reported that exports of Malaysian palm oil products during December 1 to 15 fell 10.1 per cent to 581,254 tonnes from 650,962 tonnes shipped during November 1 to 15.
Malaysia’s palm oil stocks as at end-November rose 16 per cent to 2.56 million tonnes from the previous month, according to industry regulator the Malaysian Palm Oil Board (MPOB). November production declined 3.3 per cent from October to 1.94 million tonnes. Exports fell 11.9 per cent to 1.35 million tonnes.
Malaysia, the world’s second-largest palm oil producer after Indonesia, will lower its crude palm oil export tax to 5.5 per cent in January, from six per cent in December, a government circular said on Friday.
Spot ringgit appreciated 0.02 per cent to 4.0865 against the US dollar, compared to 4.0855 on last Friday. The greenback climbed to a one-month high of 113.75 yen on Tuesday. But it made a U-turn midweek after the Federal Reserve raised interest rates as expected but also expressed concern about low inflation rates.
Technical analysis
According to the FCPO daily chart, the market plunged to a six-month low before rebounded back to 2,515 on Friday.
On Monday, Malaysian palm oil dipped to a six-month low, with the benchmark contract closing at 2,457.
On Tuesday, Malaysian palm oil was firmed, with the benchmark contract closing at 2,471.
On Wednesday, Malaysian palm oil erased its earlier gains and closed lower, with the benchmark contract closing at 2,462.
On Thursday, Malaysian palm oil pared its earlier gains during the late trade, with the benchmark contract closing at 2,450=.
On Friday, Malaysian palm oil jumped up nearly 2.57 per cent, rebounding from a 16-month low hit in the previous session. The benchmark contract closing at 2,515.
In the coming week, the active month contract will change from February to March. On Friday, a strong bullish candlestick is formed to break through 2,500, erasing all the losses made on previous days.
Resistance lines will be positioned at 2,590 and 2,625, whereas support lines will be positioned at 2,450 and 2,425. These levels will be observed in the coming week.
Major fundamental news this coming week
MPOB, ITS, and SGS reports will be released on December 20.
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.