The Malaysian palm oil futures fell, tracking losses on weaker related oils as well as the escalating trade war between China and US.
The benchmark crude palm oil futures (FCPO) contract fell 2.54 per cent to RM2,264 on Thursday, which was RM59 lower than RM2,323 during the previous Friday.
The average daily trading volume during Monday to Thursday increased 29.02 per cent with a total average of 47,809 contracts traded, as compared with a total average of 33,933 contracts traded during last Monday to Thursday.
The daily average open interest during Monday to Thursday increased 1.76 per cent to 255,374 contracts from 250,869 contracts during last Monday to Thursday.
AmSpec reported that exports of Malaysian palm oil products for July 1 to 10 fell 14.4 per cent to 278,048 tonnes, from 324.947 tonnes shipped during June 1 to 10.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during July 1 to 10 fell 23.1 per cent to 257,096 tonnes from 334,132 tonnes shipped during June 1 to 10.
US soybean and soyoil futures surged on Friday on a market recovery, after hitting lows prompted by concerns over an escalating trade war with China.
Palm oil has shed six per cent since the start of the month, tracking weakness in related oils because of concerns over the US-China trade dispute and on weak demand.
Palm oil production typically rises in the third quarter of the year in line with the seasonal trend.
Malaysian output for June is forecast to slide 11.1 per cent to 1.36 million tonnes, its weakest figure for June since 2007, due to a labour shortage, according to a Reuter’s poll.
Spot ringgit appreciated 0.16 per cent to 4.04 against the US dollar, compared with 4.0465 on last Friday.
The euro fell to a eight-day low on Friday as US inflation numbers boosted interest rate expectations and an easing in trade tensions between the US and China supported the dollar.
Technical analysis
According to the FCPO daily chart, FCPO resumed losses from last week’s session. It fell into its lowest in nearly three years.
On Monday, FCPO ended at 2,268, four points higher than the previous close of 2,264, with a traded volume of 11,786.
On Tuesday, FCPO ended at 2,259, nine points lower than the previous close of 2,268, with a traded volume of 24,525.
On Wednesday, FCPO ended at 2,184, 55 points lower than the previous close of 2,259, with a traded volume of 16,624.
On Thursday, FCPO ended at 2,184, 20 points lower than the previous close of 2,184, with a traded volume of 23,846.
On Friday, FCPO ended at 2,145, 39 points lower than the previous close of 2,184, with a traded volume of 19,844.
Based on the daily candlesticks chart, FCPO remain bearish.
Currently, RSI showed that FCPO reached an oversold level but there is no sign of a rebound momentum occurring soon. FCPO might test the first support level at 2,130, if FCPO fails to rebound, FCPO is expected to trade lower to the first support at 2,100.
We believe FCPO might continue to fall during the upcoming week.
Resistance lines will be positioned at 2,165 and 2,190, whereas support lines will be at 2,130, and 2,100.
These levels will be observed in the coming week.
Major fundamental news this coming week
AmSpec and SGS reports will be released on July 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.