Malaysian palm oil futures have slipped for four consecutive days due to weakening demand and unsatisfactory export data. It was also dragged down by other related oils such as soybean oil.
The benchmark crude palm oil futures (FCPO) contract fell 1.08 per cent to RM2,390 on Friday, which was RM26 lower than RM2,416 during the previous week.
The average daily trading volume during Monday to Thursday decreased 44.48 per cent with a total average of 26,822 contracts traded, as compared with a total average of 48,311 contracts traded during last Monday to Thursday.
Daily average open interest during Monday to Thursday increased 2.16 per cent to 239,029 contracts from 233,870 contracts during last Monday to Thursday.
AmSpec reported that exports of Malaysian palm oil products for April 1 to 25 fell 0.8 per cent to 1.157 million tonnes, from 1.166 million tonnes shipped during March 1 to 25.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during April 1 to 25 fell 1.8 per cent to 1.161 million tonnes from 1.19 million tonnes shipped during March 1 to 25.
Currently, palm oil market does not contain any bullish factors, while latest exports data showed decline in demand. Malaysian palm oil shipments for April 1 to 25 fell 0.8 to 2.5 per cent compared with the corresponding period last month, according to data from independent inspection company AmSpec Agri Malaysia and cargo surveyor Societe Generale de Surveillance. Other related oils such as China soybean oil contributed to the losses as it pulled down Malaysia’s palm oil market.
Spot ringgit depreciated 0.7 per cent to 3.9195 against the US dollar, compared with 3.8920 on last Friday.
The dollar edged higher on Friday and is on track to post its best weekly performance in more than one-and-a-half years as a spike in US Treasury yields prompted some investors to unwind some short bets against the dollar, especially against some emerging market currencies.
Technical analysis
According to the FCPO daily chart, FCPO scored four consecutive losses.
On Monday, FCPO ended at 2,406, 10 points lower than the previous close of 2,416, with a traded volume of 9,997.
On Tuesday, FCPO ended at 2,397, nine points lower than the previous close of 2,406, with a traded volume of 10,598.
On Wednesday, FCPO at 2,396, ended one point lower than the previous close of 2,397, with a traded volume of 14,845.
On Thursday, FCPO ended at 2,390, six points lower than the previous close of 2,396, with a traded volume of 8,037.
On Friday, FCPO ended at 2,381, nine points lower than the previous close of 2,390, with a traded volume of 10,273.
Based on the daily candlesticks chart, FCPO is heading downwards as supported by RSI which in tandem with FCPO downward trend.
We believe FCPO might continue the downward trend.
However, FCPO might test the first support level at 2,380. If it successfully breaks the first support level, it is expected to trade towards the second support level at 2354.
Otherwise, FCPO will rebound until the first resistance level at 2,394.
In the coming week, aggressive traders could initiate short positions while conservative traders may wait for a stronger signal before initiate any new positions.
Resistance lines will be positioned at 2,394 and 2,415, whereas support lines will be at 2,380, and 2,354, these levels will be observed in the coming week.
Major fundamental news this coming week
AmSpec and SGS reports will be released on April 30.
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.