Borneo Post FCPO Chart 18th August
The Malaysian palm oil futures jumped to a week-high due to stronger related oils and reversed losses caused by bearish sentiments on trade and currency concerns as well as exports demand.
The benchmark crude palm oil futures (FCPO) contract rose 0.23 per cent to RM2,238 on Thursday, which is RM5 lower than RM2,243 during the previous week on Friday.
The average daily trading volume during Monday to Thursday decreased 11.53 per cent with a total average of 42,867 contracts traded, as compared with a total average of 48,454 contracts traded during last Monday to Thursday.
Daily average open interest during Monday to Thursday decreased 4.85 per cent to 247,451 contracts from 260,061 contracts during last Monday to Thursday.
AmSpec reported that exports of Malaysian palm oil products for August 1 to 15 fell 14.57 per cent to 415,719 MT, from 486,609 MT shipped during July 1 to 15.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during August 1 to 15 fell 11.15 per cent to 403,862 tonnes from 454,524 tonnes shipped during July 1 to 15.
Traders are still concerned that palm oil exports will be affected by sliding emerging market currencies, as reduced purchasing power cuts into imports into countries like Turkey and India.
However, they expected buyers to hold off imports from Malaysia in August as the Southeast Asian nation has reduced its export tax on crude palm oil for September to zero from 4.5 per cent this month.
Meanwhile, China said on Thursday it would hold a fresh round of trade talks with the United States in Washington later this month, offering hope for progress in resolving a conflict that has set world markets on edge.
Spot ringgit depreciated 0.6 per cent to 4.1040 against the US dollar, compared to 4.0795 on last Friday.
The dollar stepped back from 13-1/2-month highs against other major currencies on Friday as upcoming talks between China and the US offered some hope that the world’s two largest economies will find a way to head off a full-blown trade war.
Technical analysis
According to the FCPO daily chart, FCPO gapped-up on Friday, erasing earlier losses.
On Monday, FCPO ended at 2,200, 43 points lower than the previous close of 2,243, with a traded volume of 15,295.
On Tuesday, FCPO ended at 2,212, 12 points higher than the previous close of 2,200, with a traded volume of 16,865.
On Wednesday, FCPO ended at 2,193, 19 points lower than the previous close of 2,212, with a traded volume of 15,084.
On Thursday, FCPO ended at 2,222, 29 points higher than the previous close of 2,193, with a traded volume of 19,051.
On Friday, FCPO ended at 2,238, 16 higher than the previous close of 2,222, with a traded volume of 17,019.
Based on the daily candlesticks chart, FCPO is in consolidation phase and remain in bearish zone.
FCPO might retest the first support level at 2,237 and if it fails to break below the first support level, it may continue trade lower until the second support level at 2,227.
Hence, aggressive traders may initiate short positions while conservative traders may wait for better market entry. Resistance lines will be positioned at 2,250 and 2,260, whereas support lines will be at 2,237, and 2,227. These levels will be observed in the coming week.
Major fundamental news this coming week
AmSpec and SGS reports will be released on August 20.
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.