Malaysian palm oil futures climbed higher on Thursday to 2,103, due to investors closing out positions ahead of a long holiday weekend.
Future Crude Palm Oil (FCPO) benchmark July 2015 contract settled at 2,103 on Thursday, down 51 points or 2.4 per cent from 2,154 last Friday.
Trading volume increased to 166,392 contracts from 135,128 contracts from last Monday to Wednesday.
Open interest based on Thursday increased to 543,008 contracts from 510,881 contracts from last Monday to Wednesday.
Cargo surveyor, Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during April 1 to 25 increased 5.6 per cent to 904,112 tonnes compared with 856,474 tonnes during March 1 to 25.
Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during April decreased 7.2 per cent to 1.073 million tonnes compared with 1.157 million tonnes during March.
Another cargo surveyor, Societe Generale de Surveillance (SGS), reported that Malaysia’s palm oil exports during April 1 to 25 increased 7.1 per cent to 906,594 tonnes compared with 846,217 tonnes during March 1 to 25.
SGS’s report also showed that Malaysia’s palm oil exports during April decreased 5.5 per cent to 1.077 million tonnes compared with 1.14 million tonnes during March.
Overall, demand rose from the EU, the US and China, while demand fell from India and Pakistan.
Spot ringgit weakened on Friday to 3.56. The ringgit has risen 3.7 per cent against the dollar so far April, which would be the largest monthly appreciation since January 2012, as a rebound in crude prices eased concerns that sliding crude may hurt the current and fiscal accounts of Malaysia, a net oil exporter. Malaysia will remove its crude palm oil export tax for May after imposing a 4.5 percent rate in April.
Indonesia is considering reducing its crude palm oil export tax rates, which currently range from 7.5 per cent to 22.5 per cent, according to local media reports. The threshold of US$750 a tonne for the duty to kick in will remain the same, a senior government official said.
On Monday and Tuesday, the price fell, touching an eight-month low, due to a strengthening ringgit, which increased worries that overseas buyers may move away from palm at a time when the tropical plant enters a higher production cycle, and coupled with lingering concerns over rising production this month. However, encouraging export figures kept a lid on losses.
On Wednesday, the price dropped for a sixth consecutive day, due to tracking overnight weakness in comparative edible oils markets.
On Thursday, the price climbed, as investors squared positions ahead of a long holiday weekend.
Technical analysis
According to weekly FCPO chart, after attempting to break above consolidation range 2,135 to 2,195 during the previous week, the price fell, breaking below consolidation range, while testing bottom Bollinger band and psychological barrier 2,100, closing above. The SO entered oversold territory.
According to the daily FCPO chart, on Monday, the price opened below middle Bollinger band, after previous day close below middle Bollinger band.
The price continues to remain within previous week consolidation range, 2,135 to 2,195.
The price fell, testing bottom Bollinger band, and support line 2,110, closing above.
On Tuesday, the price fell, testing bottom Bollinger band and 76.4 per cent Fibonacci projection level, 2,070, closing above. The price closed below psychological level 2,100. There is potential for the price to break below previous week consolidation range.
On Wednesday, the price opened below psychological barrier 2,100. The price fell, testing bottom Bollinger band, which continues to expand, and 76.4 per cent Fibonacci projection level, 2,170.
By the later session, the price closed above bottom Bollinger band and the 76.4 per cent Fibonacci projection.
The SO enters oversold territory. A doji candlestick was formed indicated market players are uncertain of market direction, and that there is potential for reversal as further movement downside could be limited.
On Thursday, the price rose, testing psychological barrier 2,100, closing above. Next week, the price has potential to range between 2,100 and 2,200.
Resistance lines will be placed at 2,140 and 2,190, while support lines will be positioned at 2,070 and 2,010, these levels will be observed in the coming week.
Major fundamental news this coming week
Wesak Day Public Holiday on May 4 (Monday).
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.