Friday, August 23

Crude Palm Oil Weekly Report – 25 February 2018

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Malaysian palm oil futures edged up 1.12 per cent, as market sentiments turned bearish on a less than expected drop in output.

The benchmark crude palm oil futures (FCPO) contract dipped 1.6 per cent to RM2,456 on Friday, which is RM28 higher than RM2,497 during the previous week.

The average daily trading volume during Monday to Thursday increased 25 per cent with a total average of 40,380 contracts traded, as compared with total average of 41,415 contracts traded during last Monday to Thursday.

Daily average open interest during Monday to Thursday increased 25 per cent to 225,706 contracts from 238,597 contracts during last Monday to Thursday.

Intertek Testing Services (ITS) reported that export of Malaysian palm oil products for February 1 to 20 rose 8.8 per cent to 791,992 tonnes, from 727,958 tonnes shipped during January 1 to 20.

Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during February 1 to 20 rose 9.5 per cent to 815,183 tonnes from 744,706 tonnes shipped during January 1 to 20.

Output in Malaysia, the world’s second largest palm producer, is forecast to decline from a month earlier, in line with seasonal trend and on fewer working days in February.

Data from Southern Palm Oil Millers Association (SPPOMA) showed a 22.6 per cent fall in production for the February 1 to 20 period, lent support. There was some short-covering from traders who sold down on Tuesday.

Spot ringgit appreciated 0.28 per cent to 3.9055 against the US dollar, compared with 3.8945 on last Thursday.

Most Asian currencies recovered some of their recent losses on Friday as a retreat in US Treasury yields boosted risk appetites and pushed regional assets higher.

The 10-year US Treasury yield was last trading at 2.928 per cent. It dropped to as low as 2.904 per cent on Thursday after hitting a four-year high of 2.957.

 

Technical analysis

According to the FCPO daily chart, the market slipped from last week’s gain and rebounded to week-high of 2,524.

On Monday, FCPO ended at 2,512, seven points higher than the previous close of 2,505, with traded volume of 13,444.

On Tuesday, FCPO ended at 2,485, 27 points lower than the previous close of 2,512, with traded volume of 16,331.

On Wednesday, FCPO ended at 2,491, six points higher than the previous close of 2,485, with traded volume of 22,346.

On Thursday, FCPO ended at 2,490, one point lower than the previous close of 2,491, with traded volume of 20,025.

On Friday, FCPO ended at 2,456, 34 points higher than the previous close of 2,490, with traded volume of 24,428.

Based on the daily candlesticks chart, Bollinger Band showed a changing trend might occurred this coming week. The market may test first resistance points at 2,533 and we should observe and wait for stronger market signal to initiate new positions.

In the coming week, aggressive traders could initiate new positions if the trend breaks above first resistance points while conservative traders should consider holding current position and wait for stronger reversal signal to enter the market.

Resistance lines will be positioned at 2,553 and 2,580, whereas support lines will be at 2,468, and 2,433. These levels will be observed in the coming week.

 

Major fundamental news this coming week

ITS and SGS reports will be released on February 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.