Malaysian palm oil futures erased previous week gains and edged lower this week, tracking weakness on China’s Dalian Commodity Exchange and on estimates of rising palm oil production, despite stronger export data from cargo surveyor.
The benchmark crude palm oil futures (FCPO) contract fell 0.18 per cent to RM2,744 on Friday, which is RM5 lower than RM2,749 on previous week.
The average daily trading volume during Monday, Tuesday and Thursday slightly rose 3.4 per cent with a total of 159,209 contracts traded, as compared with 205,153 contracts traded during last Monday to Thursday.
Daily open interest during Monday, Tuesday and Thursday fell 2.37 per cent to 226,799 contracts from 226,799 contracts during last Monday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products for October 1 to 20 up 11.6 per cent to 951,339 tonnes, from 852,206 tonnes shipped during September 1 to 20.
SocieteGenerale de Surveillance (SGS) reported that exports of Malaysian palm oil products during October 1 to 15 rose 8.7 per cent to 709,322 tonnes from 652350 tonnes shipped during September 1 to 15.
Data from both cargo surveyors showed a rising export of palm oil products, but demand was seen as weakening after the major festivals held on October.
Palm oil production in October is expected to increase on-month due to the higher number of working days.
However, this rise is normally seasonal. Production usually peaks in September or October and then starts to drop in November or December.
Spot ringgit depreciated 0.13 per cent to 4.2260 against the US dollar, compared with 4.2205 on last Friday.
The dollar has been supported last week and US Treasury yields have risen, with 10-year maturities hitting a one and a half week high of 2.37 per cent, as investors bet a fiscal boost might push up inflation.
On Monday, Malaysian palm oil futures extended gains, recording a fourth straight day of wins tracking higher crude oil prices and stronger export data from cargo surveyors.
On Tuesday, Malaysian palm oil futures prices fell after a run of daily gains, on slowing demand and profit-taking ahead of a public holiday on Wednesday.
On Thursday, Malaysian palm oil futures continued to fall in its second consecutive session, tracking weakness on China’s Dalian Commodity Exchange and on estimates of rising palm oil production.
On Friday, Malaysian palm oil futures edged higher after two straight sessions of declines, tracking overnight gains in overseas markets and on cargo surveyor data which showed strong exports.
Technical analysis
According to the FCPO daily chart, the market traded in consolidation phase after hitting a three-week high at 2,769.
On Monday, Malaysian palm oil surged up and traded higher, with the benchmark contract closing at 2,762, 13 points above the previous day’s closing price.
On Tuesday, Malaysian palm oil plunged after hitting a three-week high, with the benchmark contract closing at 2,741, 21 points below last week’s closing price.
On Thursday, Malaysian palm oil futures continued to fall in its second consecutive session, tracking weakness on China’s Dalian Commodity Exchange and on estimates of rising palm oil production.
On Friday, Malaysian palm oil surged up and traded higher, with the benchmark contract closing at 2,744, 22 points above last week’s closing price.
Based on the daily candlesticks chart, the Bollinger Bands are squeezing as the market was trading in sideways.
Bullish trend can be seen from the formation of higher highs and higher lows according to the weekly candlesticks chart.
In the coming week, traders can initiate long position near to 2,730 and close the position if the market trades below 2,700 by the end of the week.
Resistance lines will be positioned at 2,780 and 2,800, whereas support lines will be positioned at 2,675 and 2,650. These levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS reports will be released on October 25.
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.