Crude Palm Oil Weekly Report – August 11th, 2018

Borneo Post FCPO Chart 11th August

The Malaysian palm oil futures ended three-sessions of winning streaks and edged down on weaker related oils and weakness in ringgit but underpinned by strong export data.

The benchmark crude palm oil futures (FCPO) contract rose 2.05 per cent to RM2,243 on Thursday, which was RM46 lower than RM2,197 during the previous Friday.

The average daily trading volume during Monday to Thursday increased 9.31 per cent with a total average of 48,454 contracts traded, as compared with total average of 43,945 contracts traded during last Monday to Thursday.

Daily average open interest during Monday to Thursday decreased 2.15 per cent to 260,061 contracts from 265,779 contracts during last Monday to Thursday.

AmSpec reported that exports of Malaysian palm oil products for August 1 to 10 rose 7.4 per cent to 298,610 MT, from 278,048 MT shipped during July 1 to 10.

Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during August 1 to 10 rose 11.8 per cent to 287,501 tonnes from 257,096 tonnes shipped during July 1 to 10.

The Malaysian Palm Oil Board (MPOB) reported a 1.3 per cent monthly rise in inventory levels for July to 2.21 million tonnes.

The data also showed that production rose 12.8 per cent to 1.5 million tonnes and exports were up 6.8 per cent at 1.21 million tonnes from the previous month. Malaysia, the world’s second largest palm oil producer, sets a monthly export duty for crude palm oil, but a zero rate is incurred if palm prices fall below RM2,250.

Spot ringgit depreciated 0.07 per cent to 4.0795 against the US dollar, compared with 4.0825 on last Friday.

The dollar rose to a 13-month high against a basket of currencies on Friday and the yen also made big strides, with investors appetite for risk declining amid escalating global trade tensions and diplomatic wrangling.

Technical analysis

According to the FCPO daily chart, FCPO snapped three-session gains and edged lower. On Monday, FCPO ended at 2,205, eight points higher than the previous close of 2,205, with a traded volume of 14,156.

On Tuesday, FCPO ended at 2,237, 32 points higher than the previous close of 2,205, with a traded volume of 17,508.

On Wednesday, FCPO ended at 2,257, 20 points higher than the previous close of 2,237, with a traded volume of 21,857.

On Thursday, FCPO ended at 2,243, 14 points lower than the previous close of 2,257, with a traded volume of 13,395. On Friday, FCPO ended at 2,243, same with previous close of 2,193, with a traded volume of 17,230.

Based on the daily candlesticks chart, FCPO is currently in downward trend as EMA 50 is still below EMA 25. FCPO failed to maintain the rally and might retreats below 2,400 level. FCPO may retest second support level at 2,210.

It will rebound to first resistance level. Thus, traders may wait until the coming week market commence for clearer market direction.

Resistance lines will be positioned at 2,260 and 2,275, whereas support lines will be at 2,240, and 2,210. These levels will be observed in the coming week.

Major fundamental news this coming week

AmSpec and SGS reports will be released on August 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.

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