Crude Palm Oil Weekly Report – June 9, 2018

Malaysian palm oil futures declared losses for four consecutive sessions due to lackluster exports demand, declines in Chicago soybeans and stocked-up vegetable oil for Ramadan.

The benchmark crude palm oil futures (FCPO) contract fell 0.65 per cent to RM2,439 on Friday, which was RM16 lower than RM2,455 during the previous week.

The average daily trading volume during Monday to Thursday decreased 5.06 per cent with a total average of 36,504 contracts traded, as compared with a total average of 34,656 contracts traded during last Monday to Thursday.

Daily average open interest during Monday to Thursday decreased 0.15 per cent to 238,495 contracts from 238,144 contracts during last Monday to Thursday.

AmSpec reported that exports of Malaysian palm oil products for May fell 8.8 per cent to 1.197 million tonnes, from 1.312 million tonnes shipped during April.

Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during May fell 9.9 per cent to 1.2 million tonnes from 1.33 million tonnes shipped during April.

Malaysia’s palm oil exports in May dropped 8.8 per cent from April to around 1.2 million tonnes, independent inspection company AmSpec Agri Malaysia said. Cargo surveyor SGS said the country’s May palm oil exports fell 9.9 per cent from a month ago. Aside from that, the buying-frenzy for Ramadan has fizzled out as most buyers have already stocked up their vegetable oil.

Spot ringgit appreciated 0.01 per cent to 3.9830 against the US dollar, compared with 3.9835 on last Friday. The dollar held near to a three-week low on Friday against its rivals, while relatively high-yielding currencies such as the Australian dollar came under selling pressure as investors cut risky bets before an event-packed week.

Technical analysis

According to the FCPO daily chart, FCPO ended lower for four consecutive sessions.

On Monday, FCPO ended at 2,407, 32 points lower than the previous close of 2,439, with a traded volume of 15,456

On Tuesday, FCPO ended at 2,400, seven points lower than the previous close of 2,407, with a traded volume of 14,060.

On Wednesday, FCPO ended at 2,393, seven points lower than the previous close of 2,400, with a traded volume of 12,290.

On Thursday, FCPO ended at 2,388, five points lower than the previous close of 2,393, with a traded volume of 12,042.

On Friday, FCPO ended at 2,365, 23 points lower than the previous close of 2,388, with a traded volume of 18,277.

Based on the daily candlesticks chart, FCPO continued its downward trend as EMA 10 headed downwards crossing with EMA 25. RSI index also declined five points. We believe FCPO will continue its losing streak during the upcoming week’s open.

Thus, aggressive traders might initiate short selling position as FCPO might retest its first support position.

Conservative traders might hold on and wait for a clearer market direction. If FCPO successfully breaks the first support level, it will retest the second support level. If not, it will retest the first resistance level.

Resistance lines will be positioned at 2,400 and 2,420, whereas support lines will be at 2,349, and 2,323. These levels will be observed during the week ahead.

Major fundamental news this coming week

AmSpec, SGS and MPOB reports will be released on June 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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