Malaysian palm oil futures climbed higher on Friday to 2,180, due to solid soy oil prices.
Futures Crude Palm Oil (FCPO) benchmark January 2015 contract settled at 2,180, up 41 points or 1.92 per cent from 2,139 last Friday.
Trading volume decreased to 124,615 contracts from 140,110 contracts from last Monday, Tuesday and Thursday. Open interest based decreased to 774,902 contracts from 813,152 contracts from last Monday, Tuesday and Thursday.
Cargo surveyor, Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products during October 1 to 20 decreased 10.2 per cent to 894,697 tonnes compared with 996,065 tonnes during September 1 to 20.
Another cargo surveyor, Societe Generale de Surveillance (SGS) report showed that Malaysia’s palm oil export during October 1 to 20 decreased 11.4 per cent to 884,628 compared with 998,689 during September 1 to 20.
Overall, demand from the European Union (EU) and the US increased, while demand decreased from India by approximately 50 per cent.
Spot ringgit weakened on Friday to 2.77, due to global fears related to Ebola, after a doctor in New York, tested positive.
In September, Indonesia’s exports of crude palm oil fell by 1.7 per cent to 1.7 million tonnes due to reduced overseas demand. Initially, the price fell due to tracking losses in soy markets overseas coupled with poor export data.
However, losses were limited due to expectation of weaker production levels which could restrain inventories.
The price then rose, recovering from the previous session losses due to expectation of lower output paired with higher soybean prices.
The price continued to climb due to weakening ringgit, coupled with strengthening soy oil markets, and increased trading to clear out positions before the turn over at the end of month. The price reached a two week high by the end of the week, due to strong soy oil markets.
Technical analysis
According to weekly FCPO chart, the candlestick formed a strong bullish shooting star. The price could not break below 2,100 or above 2,200. The price could try and test middle bollienger band, 2,210.
According to the daily FCPO chart, at the beginning of the week, the price opened lower, but losses were restricted, and the price edged higher, while continuing to hover between the lower and middle bollienger band.
The price continued to increase, closing above resistance line 2,170, while breaking middle bollienger band.
The price tested physiological level is at 2,200, but it could not break through this level.
In the coming week, the price could range between middle and top bollienger band, 2,170 to 2,220.
Resistance lines will be placed at 2,210 and 2,250, while support lines will be positioned at 2,150 and 2,110, these will be observed.
Major fundamental news this coming week
ITS and SGS report on October 31 (Friday).
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.