The Malaysian palm oil futures were up after hitting a three-year low, mid-week, due to gains in related oils but sluggish demand and rising production in the coming weeks might limit gains.
The benchmark crude palm oil futures (FCPO) contract fell 0.41 per cent to RM2,185 on Thursday, which is RM9 lower than RM2,194 recorded during the previous week.
The average daily trading volume during Monday to Thursday decreased 3.41 per cent with a total average of 54,257 contracts traded, as compared with a total average of 56,175 contracts traded during last Monday to Thursday.
The daily average open interest during Monday to Thursday decreased 0.58 per cent to 261,588 contracts from 263,106 contracts during last Monday to Thursday.
AmSpec reported that exports of Malaysian palm oil products for July 1 to 25 rose 4.97 per cent to 902,979 tonnes, from 860,217 tonnes shipped during June 1 to 25.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during July 1 to 25 rose 5.63 per cent to 910,774 tonnes from 862,215 tonnes shipped during June 1 to 25.
US soyoil rose in line with soybean futures, which hit a two-week high on Tuesday as the US said it would provide up to US$12 billion in aid to shield American farmers from the economic pain stemming from its trade disputes with China. US soyoil climbed nearly two per cent on expectations of higher exports to Europe after talks between Washington and the European Union.
Spot ringgit depreciated 0.074 per cent to 4.0625 against the US dollar, compared with 4.0655 on last Friday. The dollar rose on Friday to its highest level in five days as investors waited to see if US economic growth figures would do anything to interrupt its months of strength.
Technical analysis
According to the FCPO daily chart, FCPO rebounded and may retest the first support level at 2,210.
On Monday, FCPO ended 26 points lower than the previous close of 2,194, with a traded volume of 21,741.
On Tuesday, FCPO ended 16 points lower than the previous close of 2,168, with a traded volume of 19,207.
On Wednesday, FCPO ended 12 points higher than the previous close of 2,152, with a traded volume of 19,969. On Thursday, FCPO ended 37 points higher than the previous close of 2,164, with a traded volume of 19,969.
On Friday, FCPO ended 16 points lower than the previous close of 2,201, with a traded volume of 15,953.
Based on the daily candlesticks chart, FCPO might not maintain its uptrend as it still failed to maintain above EMA 25. RSI also showing FCPO might continue its downward trend. During the week ahead, FCPO may retest first support level at 2,185 and it may continue to trade towards second support level at 2,165 if it successfully breaks the first support level.
Thus, traders who are not holding any positions may wait and observe the market’s trend for better entry point. Aggressive traders may initiate short positions.
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.
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.