Crude Palm Oil Weekly Report – January 3, 2015

Malaysian palm oil futures climbed higher on Friday to 2,284 due to increased fears of the continuing monsoon season which is expected to reduce production levels and stocks into the start of the New Year.

Futures Crude Palm Oil (FCPO) benchmark during March 2015 contract settled at 2,284, up 35 points or 1.6 per cent from 2,249 last Friday.

Trading volume decreased to 107,093 contracts from 122,176 contracts from last Monday to Wednesday.

Open interest based on decreased to 506,323 contracts from 539,920 contracts from last Monday to Wednesday.

Cargo surveyor Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products during December 1 to 31 decreased 0.9 per cent to 1.313 million tonnes compared with 1.324 million tonnes during November 1 to 30.

In a separate report, Societe Generale de Surveillance (SGS) noted that Malaysia’s palm oil exports during December 1 to 31 decreased 0.9 per cent to 1.298 million tonnes compared with 1.311 million tonnes during November 1 to 30.

Overall, demand from the EU and India increased, while demand fell from China and the US.

Spot ringgit weakened on Friday to, due to the dollar hitting a nine-year high against a basket of major currencies.

According to a senior government official, palm oil output in December could fall as a much as 15 to 30 per cent due to the severe monsoon flooding in December, from its usual rate of 10 per cent for this season.

Plantation Industries and Commodities Minister Datuk Seri Douglas Uggah Embas, reported that Malaysian palm oil stocks by the end of December could decrease by two million tonnes from 2.27 million tonnes due to relentless downpours in December.

Overall, he expected palm oil production in 2015 to reach 20 million tonnes.

On Monday, the price rose, due to severe flooding in key palm oil producing states, including Kelantan, Terengganu and Pahang, damaging supplies.

On Tuesday and Wednesday, the price fell, due to traders’ profit-taking after several consecutive days of gains, but prices continued to be supported by monsoon floods which damaged output.

On Friday, the price early losses were recovered and the price climbed higher, due to expectation that the monsoon weather will continue to damage production.

 

Technical analysis

According to weekly FCPO chart, the price began the week by testing the psychological barrier of 2,300, however there was not enough buying momentum to break, as such, it retraced lower.

According to the daily FCPO chart, on Monday, the price rose, testing the psychological level of 2,300, while remaining above top Bollinger band and in overbought territory. It eventually closed below resistance line of 2,290.

On Tuesday, the price fell, testing the psychological level of 2,300 initially, but fell lower in the afternoon.

On Wednesday, the price continued to fall, after not having enough momentum to break above the psychological barrier of 2,300 in the previous two days, the price closed below top Bollinger band.

On Friday, the price edged higher, as buying momentum increased during the afternoon session.

In the coming week, the price has potential to range between 2,200 and 2,300, until the price breaks either of these psychological barriers, the price will continue to range sideways.

Resistance lines will be placed at 2,310 and 2,350, while support lines will be positioned at 2,240 and 2,190, these will be observed in the coming week.

There is no major fundamental news this coming week.

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 : TheBorneoPost]]>

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