Crude Palm Oil Weekly Report 24 November 2013

Technical Analysis for FCPO / FCPO Daily Chart Source: BursaStation Professional

Malaysian palm oil futures ended higher by one per cent for the week although took a turn as investors booked profits from prices which soared more-than-one-year highs on Friday, while prospects of higher output from the world’s top producer weighed on the market.

The new benchmark crude palm oil futures (FCPO) in December contract settled at RM2,640 per tonne on Friday which was up by 27 points from last Friday at RM2,613. The trading range for the week was from RM2,545 to RM2,692. Total volume traded for the week amounted to 194,716 contracts which was up 16,775 contracts compared with last Friday’s 177,941 contracts. The open interest as of Thursday totalled 154,077 contracts from 150,641 contracts from previous Thursday, an increase of 3,436 contracts.

Cargo surveyor Intertek Testing Services (ITS) reported exports of Malaysian palm oil products from November 1 to 20 fell 2.11 per cent to 1,004,880 tonnes from 1,026,488 tonnes shipped during October 1 to 20. Cargo surveyor Societe Generale de Surveillance (SGS) said on Friday that exports of Malaysian palm oil products for November 1 to 20 fell 7.23 per cent to 975,011 tonnes from 1,051,004 tonnes shipped during October 1 to 20.

The Indonesian Palm Oil Board said Indonesia’s palm oil output will jump 13 per cent to 29.5 million tonnes next year as more maturing plantation areas are harvested and hence average prices may be pushed lower. Meanwhile, Malaysia’s industry regulator expects its production as the No.2 grower, to hit 19.5 million tonnes in 2014 as replanting schemes take root. Moreover, palm demand remains uncertain as winter begins and buyers may cut back on purchases due to palm’s tendency to solidify when cold.

Malaysian palm oil futures jumped to their highest in more than a year on Thursday after an industry body estimated that stocks would fall nearly 30 per cent this year from the end of 2012 and decline further in 2014. Moreover, the beginning of the monsoon season will bring heavy rains to Malaysia and Indonesia which could hamper output, as floods may complicate the task of harvesting.

Malaysian ringgit weakened throughout the week till 3.212 on Friday, but touched the highest of the week at 3.219. However, the Malaysian ringgit strengthened slightly via profit taking on Friday after upbeat US data reinforced expectations that the Fed may begin its tapering sooner than expected. Weaker ringgit will increase demand from foreign buyers as they have to pay lesser to purchase palm oil.


Technical View 

From the chart, price fell to as low as 2,545 last Wednesday which penetrated below our previous support level at 2,565 but price managed to bounce back to as high 2,692 which is the current new high for the year. Since price managed to stay above the 2,630 level which was our previous resistance, we believe the bullish outlook on the FCPO market is strengthening.

Currently, we are looking the 2,630 level as our horizontal support line (blue line/Support Line 1). Another support line (black line) will be the S2 line which we believe should the price is unable to stay above the 2,630 level, price may revisit the S2 line.   For the coming week we pegged our important support levels at 2,630, 2,580, 2,565 and 2,506. Meanwhile, for our resistance levels, we pegged important ones at 2,700, 2,755, and 2,800.


Major fundamental news this coming week

ITS & SGS Export reports – November 25 (Monday)


Oriental Pacific Futures (OPF) is a Trading Participant and Clearing Participant of Bursa Malaysia Derivatives. You may reach us at  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 : The Borneo Post

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