Crude Palm Oil Weekly Updates – 12 August 2017
Malaysian palm oil futures reversed losses from last week and traded higher after seeing a two-week low on Monday, supported by strengthening rival edible oils on CBOT and Dalian Commodity Exchange and the weakening of palm oil currency; the ringgit.
The benchmark crude palm oil futures (FCPO) contracted upwards three per cent to RM2,684 on Friday, which is RM78 higher than RM2,606 during the previous week.
The total trading volume from Monday to Thursday rose 3.21 per cent with 187,939 contracts traded, compared with 182,098 contracts traded during last Monday to Thursday.
Total open interest from Monday to Thursday increased 1.41 per cent to 840,667 contracts from 828,956 contracts during last Monday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products for August 1 to 10 dropped 1.42 per cent to 355,009 tonnes, from 360,114 tonnes shipped during July 1 to 10.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during August 1 to 10 fell 4.78 per cent to 363,007 tonnes from 381,241 tonnes shipped during July 1 to 10.
Data showed that palm oil stocks in July rose 16.8 per cent from June to 1.78 million tonnes, versus a Reuters poll which forecast a 6.5 per cent rise in inventory levels.
The exports of palm oil in July rose 1.3 per cent from the previous month to 1.4 million tonnes, according to the data.
July production surged 20.7 per cent to 1.83 million tonnes compared with June’s data, the highest since October 2015.
Palm oil production typically picks up in the second half of the year, in line with seasonal trends, but uncertainties remain over the extent of its gains as palm trees are still seeing the lingering effects of the crop-damaging El Nino.
Spot ringgit depreciated 0.39 per cent to 4.295 against the US dollar this week, compared with 4.2785 last Friday.
The greenback, which has weakened since the start of the year, got a boost on Friday after a strong US July payrolls report bolstered the case for the Federal Reserve to further tighten monetary policy.
On Monday, Malaysian palm oil futures dipped during the evening trade, hitting a two-week low, on expectations that official production data due later in the week would indicate a rise in output for July.
On Tuesday, Malaysian palm oil futures made its biggest daily gains in two weeks, reversing losses from the previous session, supported by strength in related edible oils.
On Wednesday, Malaysian palm oil futures rose to a one-week high, tracking stronger related edible oils, but pared some gains late in the session as the market traded cautiously ahead of the release of industry data.
On Thursday, Malaysian palm oil futures rose to its highest level in over a week on expectations of gains in soyoil, despite the earlier release of bearish industry data.
On Friday, Malaysian palm oil futures reversed earlier losses and traded higher on Friday, tracking performance in related edible oils on the CBOT and weaker ringgit, the palm oil denominated currency.
According to the FCPO daily chart, the market rebounded from a week-low on Monday and traded higher for three consecutive days. The market traded between 2,572 and 2,672, which is a 100-point range.
On Monday, Malaysian palm oil futures plunged to more than a one-week low, with the benchmark contract closing at 2,573, which is 29 points lower than the previous closing price.
On Tuesday, Malaysian palm oil futures traded higher, with the benchmark contract closing at 2,626, which is 53 points higher than the previous closing price.
On Wednesday, Malaysian palm oil futures pared its gains after it surged to a one-week high, with the benchmark contract closing at 2,630, which is four points higher than the previous closing price.
On Thursday, Malaysian palm oil futures surged to a one-week high during the afternoon session, with the benchmark contract closing at 2,660, which is 30 points higher than the previous closing price.
On Friday, Malaysian palm oil futures traded higher for four consecutive days as the market rose sharply during the afternoon session.
The benchmark contract closed at 2,684, which is 24 points higher than the previous closing price.
This coming week, the market is expected to trade higher after touching the middle Bollinger Band as shown in the previous chart patterns.
The psychological price at 2,600 will be a strong support level and entry point for long position.
Resistance lines would be positioned at 2,710 and 2,750, whereas support lines would be positioned at 2,575 and 2,520. These levels would be observed this coming week.
Major fundamental news in the coming week
ITS and SGS reports will be released on August 15.
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.
Source: Borneo Post Online