The Malaysian palm oil futures offset losses to chart gains, underpinned by falling output and weaker ringgit.
The benchmark crude palm oil futures (FCPO) contract rose 1.76 per cent to RM2,323 on Thursday, which is RM41 higher than RM2,282 recorded during the previous week.
The average daily trading volume during Monday to Thursday decreased 35.93 per cent with a total average of 43,019 contracts traded, as compared with total average of 67,146 contracts traded during last Monday to Thursday.
Daily average open interest during Monday to Thursday increased 0.76 per cent to 254,493 contracts from 252,566 contracts during last Monday to Thursday.
AmSpec reported that exports of Malaysian palm oil products for June 1 to 25 fell 12.5 per cent to 860,217 tonnes, from 983,656 tonnes shipped during May 1 to 25.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during June 1 to 25 fell 14.1 per cent to 862,215 tonnes from 1.004 million tonnes shipped during May 1 to 25.
Palm oil output in Malaysia, the world’s second largest producer, fell 2.1 per cent on a monthly basis in May to 1.53 million tonnes for a second straight month.
Palm oil output in the world’s two-biggest producers may decline amid disruptions in the fruit harvesting process because of a backlog of farmers trying to sell fruit to Indonesian mills and as Malaysian planters struggle with the post-holiday labour shortage.
Earlier in the day, the trader said news of a proposal by the US Environmental Protection Agency to set a higher biofuels blending mandate lent some support to palm prices.
Spot ringgit depreciated 0.62 per cent to 4.0385 against the US dollar compared with 4.0135 on last Friday.
The euro gained on Friday after the European Union leaders reached an agreement on migration that eased pressure on German Chancellor Angel, but traders said the gains may be short-lived because of deep divisions within the EU.
Technical analysis
According to the FCPO daily chart, FCPO reversed last week’s losses and rallied to its highest over two weeks.
On Monday, FCPO ended at 2,289, seven points higher than the previous close of 2,282, with a traded volume of 20,561.
On Tuesday, FCPO ended at 2,277, 12 points lower than the previous close of 2,289, with a traded volume of 11,628.
On Wednesday, FCPO ended at 2,314, 37 points higher than the previous close of 2,277, with a traded volume of 17,855.
On Thursday, FCPO ended at 2,340, 26 points higher than the previous close of 2,314, with a traded volume of 16,802.
On Friday, FCPO ended at 2,323, 17 points lower than the previous close of 2,340, with a traded volume of 14,764.
Based on the daily candlesticks chart, FCPO is still in the bearish zone despite rallying to its highest point over two weeks.
The FCPO might not cross the EMA 25 and EMA 50 lines again in the near term. In the coming week, FCPO may test first resistance at 2,345.
If it fails to break above the first resistance level, it could retreat to the first support level at 2,325.
Aggressive traders may initiate short position while passive traders may wait for better entry points in the coming week.
Resistance lines will be positioned at 2,345 and 2,360, whereas support lines will be at 2,325, and 2,310. These levels will be observed in the coming week.
Major fundamental news this coming week
AmSpec and SGS reports will be released for statistics in June.
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.