The Malaysian palm oil futures were set for a third consecutive sessions of losses, weighed down by bearish production and inventory forecasts for August as well as weaknesses in related edible oils.
The benchmark crude palm oil futures (FCPO) contract rose 2.03 per cent to RM2,264 on Thursday, which was RM46 higher than RM2,218 during the previous week on Friday.
The average daily trading volume during Monday to Thursday decreased 6.6 per cent with a total average of 32,669 contracts traded, as compared with total average of 34,979 contracts traded during last Monday to Thursday.
Daily average open interest during Monday to Thursday decreased 0.3 per cent to 261,351 contracts from 262,137 contracts during last Monday to Thursday.
AmSpec reported that export of Malaysian palm oil products for August rose 4.04 per cent to 1.072 million MT, from 1.031 million MT shipped during July.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during August rose 0.4 per cent to 1.054 million tonnes from 1.05 million tonnes shipped during July.
August end-stocks are forecast to rise nine per cent a month-on-month basis to 2.41 million tonnes, its highest since February, while production rose 9.9 per cent to 1.65 million tonnes, its highest level so far this year, according to a Reuters survey.
Palm oil production in Malaysia, the world’s second largest producer, is expected to rise in the coming months in line with the seasonal trend.
The market was also weighed down by weaknesses in palm olein on China’s Dalian Commodity Exchange, adding that the long holiday weekend could cap the upside.
Spot ringgit depreciated 0.87 per cent to 4.1435 against the US dollar, compared to 4.1075 on last Friday.
The dollar eased against the yen on Friday after a report suggested that Japan would be the next country which US President Donald Trump will likely take up trade issues.
According to the FCPO daily chart, FCPO failed to maintain gains and re-routed for three consecutive sessions.
On Monday, FCPO ended at 2,257, 12 points higher than the previous close of 2,245, with a traded volume of 13,756.
On Tuesday, FCPO ended at 2,295, 38 points higher than the previous close of 2,257, with a traded volume of 17,911. On Wednesday, FCPO ended at 2,289, six points lower than the previous close of 2,295, with a traded volume of 16,957.
On Thursday, FCPO ended at 2,275, 14 points lower than the previous close of 2,289, with a traded volume of 12,710.
On Friday, FCPO ended at 2,264, one point lower than the previous close of 2,275, with a traded volume of 13,397.
Based on the daily candlesticks chart, FCPO soon to retrace above EMA 50.
If it maintained above EMA 50 for a few consecutive days, FCPO might rally to the first resistance level.
Currently, FCPO might retest the first support level at 2,260 and if it failed to break, it may continue to trade higher until the first resistance level at 2,280.
Hence, aggressive traders may initiate short positions while conservative traders may wait for better market entry.
Resistance lines will be positioned at 2,280 and 2,300, whereas support lines will be at 2,260, and 2,250.
These levels will be observed in the coming week.
Major fundamental news this coming week
MPOB, AmSpec, and SGS reports will be released on September 10.
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.