Crude Palm Oil Weekly Report April 20, 2014

Malaysian palm oil futures settled 0.7 per cent higher for the week as market traded thinly on Friday due to expectations of a recovery in food and fuel demand for the tropical oil.

However, investors booked profits from big gains earlier in the week because of weakness in overseas soy markets and a dragging firm ringgit.

Crude palm oil futures (FCPO) settled at 2,634 which was up 19 points from 2,615 last Friday.

Cargo Intertek Testing Services (ITS) reported a 8.6 per cent rise for the first 15 days of April where export figures were reported at 521,847 tonnes compared to the first 15 days of March at 480,730 tonnes.

Cargo Société Générale de Surveillance (SGS) reported a 6.7 per cent rise in export figures at 500,057 tonnes for the first 15 days of April compared to the first 15 days of March at 468,855 tonnes.

Profit taking took place since last Thursday as the price remained toppish; near 2,700 level.

Talks of China commodity buyers potentially defaulting on a further 1.2 million tonnes of soybeans worth about US$900 million shipped from the US and South America kept traders wondering whether the world’s second-largest edible oil buyer would also lead to slow purchases of other vegetable oils.

However, price is expected to strengthen as demand for palm in April onwards as buyers in India, Pakistan and the Middle East restock ahead of the Muslim holy month of Ramadan in late June, followed by the Eid al-Fitr celebrations in July.

Market players are observing for Malaysian export data for the April 1 to 20 period, which will be released by cargo surveyors on Monday, to gauge global demand for the tropical oil.

Throughout the week, spot rate ringgit managed to weaken but unfortunately strengthened to 3.237 before it closed for the week at 3.239.

Ringgit traded quietly towards Friday as market is subdued by the Good Friday holiday. The strengthening ringgit was also one of the many reasons why FCPO fell to as low as 2,623.

Normally, stronger ringgit will deter demand from overseas as it will be more expensive to purchase palm products.


Technical view   

From the chart, price corrected itself after it rebounded to as high as 2,700.

Continuing from the technical commentary last week, the EMA 200 line (orange line) proves to be a very strong support line and we will continue to use it as our strong support level for the time being.

We are currently still observing whether market will rebound from the correction last Thursday and Friday.

For the time being, we still maintain our positive view about FCPO direction and we are currently observing when the correction since March 11, 2013 will end.

The reason being the candlesticks formed during Wednesday to Friday suggested that price may already found its support and buyers may focus on coming back to the market as sellers seem to be exhausted.

However, stronger support could also mean that should price managed to go below 2,570 level.

It also means there is another potential of a drop to as low as 2,485.

For the coming week we pegged our important support levels at 2,620, 2,570 and 2,525.

Meanwhile, for our resistance levels, we pegged important ones at 2,670-2,700, 2730 and 2,780.


Major fundamental news this coming week

MPOB, ITS and SGS report on April 20 (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 : TheBorneoPost

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