Crude Palm Oil Weekly Report – 10 February 2018

Malaysian palm oil futures edged up 1.12 per cent, despite losses from global financial markets during this week as traders took profits, triggered by concerned about rising inflation and higher interest rates.

The benchmark crude palm oil futures (FCPO) contract rose 1.12 per cent to 2,497 ringgit on Friday, which is RM28 higher than RM2,469 during the previous week. The average daily trading volume during Monday to Thursday increased 22.19 per cent with a total average of 41,415 contracts traded, as compared with total average of 32,225 contracts traded during last Monday to Tuesday.

Daily average open interest during Monday to Thursday increased 1.49 per cent to 238,597 contracts from 235,048 contracts during last Monday to Tuesday.

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 export of Malaysian palm oil products during January 1 to 31 fell 8.8 per cent to 1.313 million tonnes from 1.439 million tonnes shipped during December 1 to 31.

Stock markets tumbled worldwide as investors fled from equities, spooked by a sharp rise in US bond yields following data that showed US wages increasing at the fastest pace since 2009. This raised concerns about rising inflation and potentially higher interest rates. A weaker ringgit typically supports the vegetable oil by making it cheaper for foreign buyers. The Malaysian currency had weakened by 0.3 per cent against the dollar to 3.9270 around Friday noon.

Spot ringgit depreciated 1.28 per cent to 3.9385 against the US dollar, compared to 3.8880 on last Friday. The euro gained against the dollar on Friday but the single currency was still headed for its worst weekly performance since October after the global stock market sell-off squeezed investors betting against the greenback out of their positions. The dollar, against a basket of currencies, was flat on Friday after gaining 1.1 per cent. The US currency remains down 2.1 per cent this year.


Technical analysis

According to the FCPO daily chart, the market rebounded from last week’s lost and gained 24 points despite edging down during mid-week. It continued to rally until 2,515 points on Friday.

On Monday, FCPO ended at 2,493, 24 points higher than the previous close of 2,469, with traded volume of 23,969.

On Tuesday, FCPO ended at 2,470, 23 points lower than the previous close of 2,493, with traded volume of 18,236.

On Wednesday, FCPO ended at 2,486, 16 points higher than the previous close of 2,470, with traded volume of 23,303.

On Thursday, FCPO ended at 2,497, 11 points higher than the previous close of 2,486, with traded volume of 15,751.

On Friday, FCPO ended 2515, 18 points higher than the previous close of 2,497, with traded volume of 17,280.

Based on the daily candlesticks chart, the market may continue to head sideways as shown by the Bollinger Band and also indicated by Moving Average Convergence Divergence (MACD) which did not show any divergence yet. In the coming week, traders might continue holding the current position as FCPO is still in consolidation phase and should wait for a reversal signal to appear.

Resistance lines will be positioned at 2,555 and 2,583, whereas support lines will be at 2,441, and 2,417. 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 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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