Crude Palm Oil Weekly Report – January 6, 2018

0

Malaysian palm oil futures rose to their highest in one month in early trade, charting a second consecutive weeks on track supported by related edible oils and on expectations of stronger demand in the coming weeks.

The benchmark crude palm oil futures (FCPO) contract rose 3.68 per cent to RM2,590 on Friday, which is RM92 higher than RM2,498 on previous week.

The average daily trading volume during Tuesday to Thursday fell 35.31 per cent with a total of 64,689 contracts traded, as compared with 99,998 contracts traded during last Tuesday to Thursday.

However, daily open interest during Tuesday to Thursday dropped 2.44 per cent to 239,187 contracts from 245,165 contracts during last Tuesday to Thursday.

Intertek Testing Services (ITS) reported that export of Malaysian palm oil products for December 1 to 31 rose 6.73 per cent to 1.422 million tonnes, from 1.332 million tonnes shipped during November 1 to 30.

SocieteGenerale de Surveillance (SGS) reported that export of Malaysian palm oil products during December 1 to 31 fell 1.3 per cent to 1.439 million tonnes from 1.311 million tonnes shipped during November 1 to 30.

Inventories are forecast to grow by 5.1 per cent on the month to 2.69 million tonnes, the highest level since November 2015 and a sixth straight month of gains, based on a median of eight planters, traders and analysts polled by Reuters.

Output in December is seen falling to 1.82 million tonnes, down 6.6 per cent from November, and its sharpest monthly decline in six months.

But that would still represent the highest December level since at least 2000.

Meanwhile, the survey showed Malaysia’s December exports are likely to have gained 7.8 per cent on the month to 1.46 million tonnes, as key buyers such as India and Europe restocked.

Spot ringgit appreciated 0.99 per cent to 4.0075 against the US dollar, compared to 4.0475 on last Friday.

The dollar had bounced on Wednesday after strong manufacturing and construction data, as well as somewhat hawkish Federal Reserve minutes.

 

Technical analysis

According to the FCPO daily chart, the market finally traded outside the consolidation line and moved higher toward 2,615, up 4.68 per cent for the week.

On Tuesday, Malaysian palm oil futures opened higher, with the benchmark contract closing at 2,532, 34 points higher than the previous close.

On Wednesday, Malaysian palm oil futures surged to a five-week high, with the benchmark contract closing at 2,607, 75 points higher than the previous close.

On Thursday,     Malaysian palm oil futures traded lower, with the benchmark contract closing at 2,583, 24 points lower than the previous close.

On Friday, Malaysian palm oil futures traded higher than the previous opening, with the benchmark contract closing at 2,590, seven points higher than the previous close.

The double bottom was formed on the daily candlesticks chart, which is a sign of market bullish reversal.

The Bollinger Bands channel widened, showing an increase in price volatility, which is another signal of a bullish trend.

Resistance lines will be positioned at 2,680 and 2,710, whereas support lines will be positioned at 2,525 and 2,450.

These levels will be observed in the coming week.

 

Major fundamental news this coming week

ITS and SGS reports will be released on January 10.

 

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.