Malaysian palm oil futures pulled back from a seven-week top and declined sharply, as it tracked weaknesses in related edible oils and strengthening ringgit, the tropical oil currency.
The benchmark crude palm oil futures (FCPO) contract fell 1.74 per cent to RM2,545 on Friday, which is RM45 lower than RM2,590 during the previous week.
The average daily trading volume during Monday to Thursday fell 21.3 per cent with a total of 203,643 contracts traded, as compared with 194,069 contracts traded during last Tuesday to Thursday.
Daily open interest during Monday to Thursday dropped 4.16 per cent to 239,187 contracts from 239,187 contracts during last Tuesday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products for January 1 to 10 fell 1.4 per cent to 359,346 tonnes, from 364,277 tonnes shipped during December 1 to 10.
SocieteGenerale de Surveillance (SGS) reported that exports of Malaysian palm oil products during January 1 to 10 rose 12.2 per cent to 380,837 tonnes from 339,289 tonnes shipped during December 1 to 10.
Industry regulator the Malaysian Palm Oil Board (MPOB) released the monthly report recently. According to the data, inventories in Malaysia increased seven per cent during the previous month to the largest level since November 2015. Production fell 5.6 per cent in December to 1.8 million tonnes, but output was still at its highest for the final month of the year since at least 2,000, the MPOB data showed. Meanwhile, December exports rose 4.9 per cent to 1.4 million tonnes. Malaysia announced last week it would suspend export taxes on crude palm oil for three months to spur demand and boost prices, which has been recovering from a 16-month low reached in December.
Spot ringgit appreciated 0.89 per cent to 3.9715 against the US dollar, compared with 4.0075 on Friday. The dollar slumped against rivals on Friday on the back of weak factory inflation data, while the euro enjoyed solid support after the European Central Bank hinted that it could be gearing up to trim its massive monetary stimulus.
According to the FCPO daily chart, the market hit a seven-week top on Tuesday before pulling back and declining sharply to the week low of 2,528.
On Tuesday, Malaysian palm oil futures opened higher, with the benchmark contract closing at 2,532, 34 points higher than the previous close.
On Wednesday, Malaysian palm oil futures surged to a five-week high, with the benchmark contract closing at 2,607, 75 points higher than the previous close.
On Thursday, Malaysian palm oil futures traded lower, with the benchmark contract closing at 2,583, 24 points lower than the previous closing price.
On Friday, Malaysian palm oil futures traded higher than the previous opening, with the benchmark contract closing at 2,590, seven points higher than the previous closing price.
Based on the daily candlesticks chart, the market bounced back after touching the Upper Bollinger Band and heading towards the Middle Bollinger Band. This coming week, the market is expected to continue to trade lower if the daily candlestick successfully breaks through the Middle Bollinger Band. Resistance lines will be positioned at 2,640 and 2,680, whereas support lines will be positioned at 2,500 and 2,450. These levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS reports will be released on January 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