Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives soared this week due to the rising demand for tropical oil and the relief from the uncertainties in the eurozone countries.
The benchmark FCPO September contract surged RM105 or 3.69 per cent to close at RM2,953 per tonne on Friday from RM2,848 per tonne last Friday.
The trading range for the week was from RM2,869 to RM3,062. Total volume traded for the week amounted to 187,549 contracts, up 47,536 contracts from the previous week.
The open interest as at Thursday decreased to 94,528 contracts from 97,885 contracts the previous Thursday.
The palm oi l market started the week with a positive tone after the proausterity parties in Greece won the election on Sunday, reducing the fear that the country might need to exit from the eurozone.
The leaders of the Group of 20 countries indicated they would act together to strengthen the economic recovery, to promote job growth and to address the financial market tensions during their meeting in Mexico from June 18 to June 19.
In addition, the US Department of Agriculture (USDA) released its weekly crop progress report on Monday saying that 56 per cent of soybean crop was in good to excellent condition as of Sunday, declined from 60 per cent the previous week due to dry weather condition in US.
Some weather forecast reports indicated the US weather would remain dry in few areas in Midwest next week which might further deteriorate the corn and soybean crop condition in those areas.
Cargo surveyor ITS released the palm oil export fi gures for the period of June 1 to June 20 on Wednesday at 991,917 tonnes, a surge of 15.03 per cent while another surveyor SGS at 996,662 tonnes, an increase of 15.15 per cent from the same period last month.
The exports demand was expected to remain strong for the rest of June approaching the fasting month of the Muslim in mid-July.
The easing fear of the uncertainties in eurozone area coupled with the strong palm oil fundamental boosted the palm oil prices to jump more than RM200 from the previous week’s low just within the first three days of the week.
However, a series of weak economic data from the US, European countries and China indicated the global economy was still slowing down coupled with the credit rating downgrade on 15 global banks by Moody on Thursday remained a concern among the traders.
The development of the US weather and the debt issue in Spain and Italy needed to be monitored closely as well as it would give an impact on palm oil prices in the coming weeks.
The benchmark September contract rebounded strongly during the beginning of the week and vulnerable for profit taking activities after the market rose too fast, leaving two gaps behind.
Based on the latest development of the chart, we believe RM2,838 level was very likely to be the low for the current downtrend. In our view, the palm oil prices should be slowly elevated from the current range.
Resistance was pegged at RM3,039 and RM3,083 while support was set at RM2,900 and RM2,838.
Major fundamental news this coming week
Malaysian export data for June 1 to June 25 by ITS and SGS on June 25 and the export figure for the full month of June by ITS on June 30.