Malaysian palm oil futures extended losses, mainly contributed by the decision to maintain exports tax as well as lacklustre demand data reported from MPOB, SGS and AmSpec.
The benchmark crude palm oil futures (FCPO) contract fell 4.22 per cent to RM2,336 on Thursday, which was RM103 lower than RM2,439 recorded during the previous week on Friday.
The average daily trading volume during Monday to Wednesday increased 22.25 per cent with a total average of 46,950 contracts traded, as compared with the total average of 36,504 contracts traded during last Monday to
Thursday.
Daily average open interest during Monday to Wednesday increased 4.95 per cent to 250,908 contracts from 238,495 contracts during last Monday to Thursday.
AmSpec reported that exports of Malaysian palm oil products for June 1 to 10 fell 20.1 per cent to 324,947 tonnes, from 406,689 tonnes shipped during May 1 to 10.
Societe Generale de Surveillance (SGS) reported that export of Malaysian palm oil products during June 1 to 10 fell 18.2 per cent to 334,132 tonnes from 408,568 tonnes shipped during May 1 to 10.
The Malaysian government’s decision to reinstate export tax last month after a three-month hiatus also weighed down on palm oil prices.
Besides that, Malaysia’s palm oil stocks at end-April dropped 6.4 per cent to 2.17 million tonnes compared with the previous month, industry regulator Malaysian Palm Oil Board (MPOB) said on Thursday.
Production was seen as flat at 1.57 million tonnes, while exports were forecast to fall 5.5 per cent to 1.48 million tonnes.
Spot ringgit depreciated 0.23 per cent to 3.9920 against the US dollar, compared with 3.9830 on Friday.
The dollar slipped back from its three-week high against the yen on Thursday, quickly erasing gains made after the Federal Reserve took a slightly more hawkish policy tone in signaling two more rate hikes by year-end thanks to a solid outlook for the world’s biggest economy.
Technical analysis
According to the FCPO daily chart, FCPO erased from previous losses and gained profits fortwo consecutive sessions.
On Monday, FCPO ended at 2,358, seven points lower than the previous close of 2,365, with a traded volume of 10,622.
On Tuesday, FCPO ended at 2,326, 32 points lower than the previous close of 2,358, with a traded volume of 14,029.
On Wednesday, FCPO ended at 2,316, 10 points lower than the previous close of 2,326, with a traded volume of 18,905.
On Thursday, FCPO ended at 2,336, 20 points higher than the previous close of 2,316, with a traded volume of 6540.
Based on the daily candlesticks chart, FCPO started to rebound from the previous week’s losses. However, EMA 25 and 50 have yet to crossover and this indicates that the FCPO is still in a bearish sentiment. In the coming week, aggressive traders may initiate minimal amount of long positions. If FCPO fails to break above the first resistance level, it is expected to retreat to the first support level. Conservative traders may hold on until stronger bullish signal appear.
Resistance lines will be positioned at 2,350 and 2,368, whereas support lines will be at 2,300, and 2,280. These levels will be observed in the coming week.
Major fundamental news this coming week
AmSpec and SGS reports will be released on June 15.
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.