Crude Palm Oil Weekly Report – 3 February 2018

Malaysian palm oil futures edged down 0.5 per cent, after cargo surveyor showed a weakening export data, due to the declining demands from oversea consumer. The tropical oil also weighed by the overnight losses in related edible oils after the market closed on Wednesday and Thursday for national holidays.

The benchmark crude palm oil futures (FCPO) contract fell 0.5 per cent to 2,469 ringgit on Friday, which is RM12 lower than RM2,481 during the previous week.

The average daily trading volume during Monday to Tuesday fell 18.58 per cent with a total average of 32,225 contracts traded, as compared with total average of 39,579 contracts traded during last Monday to Thursday.

Daily average open interest during Monday to Tuesday increased 0.21 per cent to 235,048 contracts from 234,549 contracts during last Monday to Thursday.

Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products for January 1 to 31 fell 9.3 per cent to 1.289 million tonnes, from 1.422 million tonnes shipped during December 1 to 31.

Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during January 1 to 31 fell 8.8 per cent to 1.31 million tonnes from 1.439 million tonnes shipped during December 1 to 31.

Stock levels in Malaysia rose to an over two year high of 2.7 million tonnes at end-December, but is forecast to decline from those levels as output eases in January, in line with the seasonal trend. Palm oil output is expected to see declines in the first quarter of the year, in line with seasonal trend, reducing market supply and lending support to prices.

Spot ringgit depreciated 0.34 per cent to 3.888 against the US dollar, compared with 3.875 on last Friday. The ringgit has appreciated four per cent since the start of the year, and has gained over a fifth of its value since 2017, in line with improving crude oil prices. The dollar index, which tracks the greenback against a basket of six major rivals, inched 0.1 per cent higher to 88.758, holding above a three-year low of 88.429 set one week ago. However, it is still down 0.4 per cent for the week.

 

Technical analysis

According to the FCPO daily chart, the market began the week with a bullish candlestick on Monday. However, it failed to trade above the previous week’s high and pulled back from Monday’s high at 2,523.

On Monday, FCPO ended at 2,520, 39 points higher than previous close of 2,481, with a traded volume of 14,122.

On Tuesday, FCPO ended at 2,490, 30 points lower than the previous close of 2,520, with traded volume of 18,180.

On Friday, FCPO ended at 2,469, 21 points lower than the previous close of 2,490, with a traded volume of 11,115.

Based on the daily candlesticks chart, the market continued to trade sideways, as indicated by the Bollinger Bands. Head and shoulder was formed, which was a bearish reversal pattern, according to daily candlestick chart. In the coming week, traders might initiate short position if the market trade below 2,430.

Resistance lines will be positioned at 2,555 and 2,583, whereas support lines will be at 2,433, and 2417. These levels will be observed in the coming week.

Major fundamental news this coming week

ITS and SGS reports will be released on February 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.

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