Crude Palm Oil Weekly Report – December 30, 2017

Malaysian palm oil jumped over one per cent and rebounded from last week losses, on stronger export demand and expectations of weaker production.

The benchmark crude palm oil futures (FCPO) contract rose 1.63 per cent to RM2,498 on Friday, which is RM40 higher than RM2,458 during the previous week.

The average daily trading volume during Tuesday to Thursday fell 27.38 per cent with a total of 99,998 contracts traded, as compared with 183,585 contracts traded during last Monday to Thursday.

However, daily open interest during Tuesday to Thursday increased 1.44 per cent to 245,165 contracts from 241,693 contracts during last Monday to Thursday.

Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products for December 1 to 25 rose one per cent to 1.09 million tonnes, from 1.079 million tonnes shipped during November 1 to 25.

SocieteGenerale de Surveillance (SGS) reported that exports of Malaysian palm oil products during December 1 to 25 fell 1.3 per cent to 1.108 million tonnes from 1.094 million tonnes shipped during November 1 to 25.

Exports of Malaysian palm oil products for December 1 to 25 rose about one per cent from a month earlier, data released by cargo surveyors ITS and SGS showed on Tuesday.

Demand for the tropical oil is expected to improve in the coming weeks, as key buyer China stocks up ahead of the Lunar New Year holidays in February.

However, production is seen declining until the first quarter of next year in line with the seasonal trend. It last declined 3.3 per cent to 1.94 million tonnes in November.

Spot ringgit appreciated 0.8 per cent to 4.0475 against the US dollar, compared to 4.08 on last Friday.

The dollar started 2017 on a high, with the index that tracks it against a basket of six major currencies hitting its strongest in 14 years on hopes that new US president Donald Trump would implement pro-growth, pro-inflation measures.

 

Technical analysis

According to the FCPO daily chart, the market gapped up six points to begin the trading on Monday and touched a one-week high at 2,541 on Wednesday.

On Tuesday, FCPO ended the trade with the benchmark contract closing at 2,504, 46 points higher than the closing price last Friday.

On Wednesday, Malaysian palm oil futures continued to rise for a second consecutive day with the benchmark contract closing at 2,540, 36 points higher than the closing price on Tuesday.

On Thursday,     Malaysian palm oil futures erased gains after rising for two consecutive days, with the benchmark contract closing at 2,520, 20 points lower than Wednesday’s close.

On Friday, Malaysian palm oil futures traded lower, with the benchmark contract closing at 2,498, 22 points lower than the previous close.

In the coming week, the Bollinger Bands could narrow as prices volatility is seen as decreasing. Traders should be prepared for a volatility expansion, which means a directional move could be in store.

Resistance lines will be positioned at 2,560 and 2,600, whereas support lines will be positioned at 2,425 and 2,400. These levels will be observed in the coming week.

 

Major fundamental news this coming week

ITS and SGS reports will be released on December 31.

 

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.

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