Monday, September 26

Crude Palm Oil Weekly Report 27 July 2013


Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional

Crude Palm Oil Futures (FCPO) on Bursa Malaysia Derivatives fell below the psychological level of 2,200 which also broke the consolidation range since October 2012.

However, it managed to end higher on Friday as traders bargain hunt after prices dropped to a near four year low.

Palm oil prices dropped to its lowest since October 2009 as worries of ideal weather in the US Midwest could lead to a record soybean harvest which may boost soyoil supplies while shifting demand away from the competing tropical oil.

Cargo surveyor Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products for July 1 to 20 fell 14.03 per cent to 798,482 tonnes from 928,810 tonnes during June 1 to 20.

Meanwhile, cargo surveyor Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products for July 1 to 20 fell 13.8 per cent to 794,081 tonnes from 916,768 tonnes shipped during June 1 to 20.

For July 1 to 25, cargo surveyor ITS reported that exports of Malaysian palm oil products at 1,085,392 tonnes from 1,167,266 tonnes which fell 7.01 per cent.

Cargo surveyor SGS reported that exports of Malaysian palm oil products at 1,060,421 tonnes from 1,128,408 tonnes which fell 6.03 per cent.

Palm oil posted a 3.5 per cent drop this week which was its fourth weekly loss as it was also pressured by fall in demand side.

Exports may improve in the coming week although it may not improve the monthly supply and demand data next month especially when production cycles started to increase in the second half of the year.

Meanwhile, US dollar went higher throughout the week as the US economic outlook improved throughout the week.

The currency went up to as high as 3.2110 against the Malaysian ringgit. A higher greenback against the ringgit normally makes the palm cheaper for overseas buyers and refiners.

Meanwhile, Indonesia rupiah (US$1= 10,260 rupiah) had been weakened by the strength in dollar where this could prompt foreign buyers to shift their demand to Indonesia as weaker rupiah makes their palm cheaper for purchase.

The benchmark FCPO October contract settled RM2,183 per tonne on Friday which was down 74 points from last Friday at RM2,257.

FCPO September contract becomes the second month as FCPO October futures contract becomes the benchmark month.

The trading range for the week was from RM2,281 to RM2,137. Total volume traded for the week amounted to 190,051 down 10,736 contracts compare with last Friday’s 200,787 contracts.

The open interest as of Thursday increased 3,247 contracts to 201,209 contracts from 197,962 contracts from previous Thursday.

Technical View

From the chart, price continued to fall below again and this time it broke below the consolidation range support line.

As we can see from the chart, price dived once it broke below the support line because fcpo price finally break the consolidation range and revisit the low nearly four years ago.

Since price now breaks and closes below the consolidation range support line, price may fall further unless it is able to close above the support line in the coming weeks.

For the coming week, we pegged our important support levels at 2,150, 2,137, 2,100, and 2,080 meanwhile, for our resistance levels, we pegged important ones at 2,200, 2,220, 2,280, and 2,300.

Major fundamental news this coming week

Malaysian export data for June 1 to 30 by ITS and SGS on July 31 (Wednesday).

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