The Malaysian palm oil futures rebounded from the previous week’s losses, but failed to maintain its winning streaks due to technical correction and sluggish demand.
The benchmark crude palm oil futures (FCPO) contract fell 3.09 per cent to RM2,194 on Thursday, which was RM70 lower than RM2,264 recorded during the previous week on Friday.
The average daily trading volume during Monday to Thursday increased 14.89 per cent with a total average of 56,175 contracts traded, as compared with a total average of 47,809 contracts traded during last Monday to Thursday.
The daily average open interest during Monday to Thursday increased 2.94 per cent to 263,106 contracts from 255,374 contracts during last Monday to Thursday.
AmSpec reported that exports of Malaysian palm oil products for July 1 to 20 fell 1.3 per cent to 681,178 tonnes, from 690,015 tonnes shipped during June 1 to 20.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during July 1 to 20 rose 3.3 per cent to 692,334 tonnes from 670,442 tonnes shipped during June 1 to 20.
Malaysia’s palm oil production is expected to rise in July and throughout the third quarter of the year, in line with the seasonal trend.
Exports from Malaysia, the world’s second largest palm oil producer, had already declined for a third straight month in June, down 12.6 per cent at 1.13 million tonnes, on slower demand from key buyers India and China. Independent inspection company AmSpec Agri Malaysia reported a 1.3 per cent decline in Malaysian palm oil exports for July 1 to 20.
Spot ringgit depreciated 0.63 per cent to 4.0655 against the US dollar, compared with 4.04 on last Friday.
The dollar held below a one-year high on Friday after US President Donald Trump expressed concerns about a stronger currency, although a weakening Chinese yuan reduced risk appetite.
Technical analysis
According to the FCPO daily chart, FCPO gained from last week’s losses but was unable to maintain its uptrend.
On Monday, FCPO ended at 2,171, 26 points higher than the previous close of 2,j\145, with a traded volume of 17,380.
On Tuesday, FCPO ended at 2,170, one point lower than the previous close of 2,171, with a traded volume of 16,866.
On Wednesday, FCPO ended at 2,212, 42 points higher than the previous close of 2,170, with a traded volume of 24,268.
On Thursday, FCPO ended at 2,195, 17 points lower than the previous close of 2,212, with a traded volume of 19,022.
On Friday, FCPO ended at 2,194, one point lower than the previous close of 2,195, with a traded volume of 17,725.
Based on the daily candlesticks chart, current market showed signs of a rebound but market sentiment remained unclear. In the coming week, FCPO might test the first support level at 2,185.
If FCPO fails to rebound, it is expected to trade lower to the second support level at 2,165.
Traders should wait for the coming week’s market’s movement to further confirm the upcoming market trend.
Resistance lines will be positioned at 2,210 and 2,240, whereas support lines will be at 2,185, and 2,165.
These levels will be observed in the coming week.
Major fundamental news this coming week
AmSpec and SGS reports will be released on July 25.
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.