Malaysian palm oil futures reversed last week losses and rose, surging to five month high, on expectations that production growth will be slower than previously forecast and tracking soyoil surges on Chicago Board of Trade (CBOT).
The benchmark crude palm oil futures (FCPO) contract rise 2.57 per cent to RM2,751 on Friday, which is RM69 higher than RM2,682 on previous week.
The total trading volume from Monday to Thursday rose 29.89 per cent with 251,851 contracts traded, comparing with 193,894 contracts traded during last Monday to Thursday.
Total open interest from Monday to Thursday increased 1.24 per cent to 852,314 contracts from 841,908 contracts during last Monday to Thursday.
Intertek Testing Services (ITS) reported that export of Malaysian palm oil products for August 1 to 25 dropped 8.1 per cent to 934,544 tonnes, from 1,016,689 tonnes shipped during July 1 to 25.
Societe Generale de Surveillance (SGS) reported that export of Malaysian palm oil products during August 1 to 25 fell 8.4 per cent to 956,547 tonnes from 1,044,456 tonnes shipped during July 1 to25.
Both cargo surveyor reports forecast a declining of export demand on palm oil related products from previous month, July.
Annual palm oil production in Malaysia is seen rising 15.5 per cent to 20 million tonnes in 2017 versus 17.32 million tonnes last year, according to industry officials from Malaysian Palm Oil Board (MPOB).
Exports are expected to reach 18 million tonnes this year, up from 16.05 million tonnes in 2016, drive by strong demand from major importing countries. Output for the second half of the year is seen at 10.17 million tonnes, as oil extraction rates and fresh fruit bunch yields are expected to be higher due to good weather outlook.
Spot ringgit appreciated 0.37 per cent to 4.2725 against the US dollar this week, compared to 4.2885 on last Friday.
The US dollar fared better as investors turned their sights to the Jackson Hole central bankers’ meeting at which Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are due to speak on Friday, although no new policy messages are expected from either.
On Monday, Malaysian palm oil futures surged to a near-five-month high in evening trade, supported by forecasts of slower than expected output growth and technical buying despite weaker export data from cargo surveyors.
On Tuesday, Malaysian palm oil futures extended gains to five-month highs on concerns about production, and tracking advances in related edible oils.
On Wednesday, Malaysian palm oil futures rose slightly at the close of trade, their fifth consecutive day of gains, tracking stronger soyoil prices on the Chicago Board of Trade (CBOT). On Thursday, Malaysian palm oil futures extended gains into a sixth session on Thursday and hovered near a five-month high hit in the evening on expectations that production growth will be slower than previously forecast.
On Friday, Malaysian palm oil futures fell nearly one per cent as cargo surveyor data that showed weak exports and as investors booked profit following six straight sessions of gains.
According to the FCPO daily chart, the market successfully traded outside the consolidation zone and broke through the upper Bollinger band this Monday.
The market pulled back slightly after hitting the five-month high at RM2,782 as profit taking occurred.
On Monday, Malaysian palm oil futures traded higher for 4 consecutive days and surged to more than 4-month high, with the benchmark contract closed at RM2,711, which is 29 points higher than the previous closing price.
On Tuesday, Malaysian palm oil futures pared its early gains after hitting a 5-month high, with the benchmark contract closed at RM2,735, which is 24 points higher than the previous closing price.
On Wednesday, Malaysian palm oil futures erased its earlier losses and traded higher, with the benchmark contract closed at RM2,739, which is 4 points higher than the previous closing price.
On Thursday, Malaysian palm oil futures traded higher for seven consecutive days and surged to a 5-month high, with the benchmark contract closed at RM2,777, which is 38 points higher than the previous closing price.
On Friday, Malaysian palm oil futures traded lower, with the benchmark contract closed at RM2,751, which is 26 points lower than the previous closing price.
The Bollinger bands are widening as the candlesticks traded outside of consolidation zone and it showed a sign of volatile prices.
Next week, the market is anticipated to retrace slightly before continue its uptrend and trade between upper and middle Bollinger bands. Resistance lines will be positioned at RM2,860 and RM2,810, whereas support lines will be positioned at RM2,690 and RM2,660, these levels will be observed next week.
Major fundamental news this coming week
ITS & SGS reports will be released on 30th of August.
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