29/09/2014 (Borneo Post) - Malaysian palm oil futures were fell slightly lower on Friday to 2,177 as buyers take profit before the weekend, and before the price technically peaks.

Futures Crude Palm Oil (FCPO) benchmark for December 2014 contracts settled at 2,177 which was up 68 points or 3.22 per cent from 2,109 last Friday.

Trading volume decreased to 148,688 contracts from 222,193 contracts totalled from last Monday, Wednesday and Thursday.

Open interest based decreased to 773,973 contracts from 810,180 contracts totalled from last Monday, Wednesday and Thursday.

Cargo surveyor, ITS reported (September 20, 2014) that exports of Malaysian palm oil products for the first 20 days of September increased 21.2 per cent to 996,065 compared with 822,026 during the first 20 days of August.

Another report by ITS showed (September 25, 2014) showed exports of palm oil products for the first 25 days of September rising 29.6 per cent to 1.279 million compared with 986,931 during first 25 days of August. Overall, EU, China and the rest of Asia reported a steady level of imports.

Cargo surveyor, SGS report (September 22, 2014) reported that Malaysian palm oil exports for the first 20 days of September rose 26 per cent to 998,689 compared with 792,817 during the first 20 days of August.

SGS confirmed that palm oil exports rose 34.6 per cent to 1.287 million for the first 25 days of September from 956,092 during the first 25 days of August.

Spot ringgit eased slightly on Friday to 3.257, from a week high at 3.2645.

The ringgit continued to weaken for the fourth straight week, due to expectation that the Fed will increase interest rates.

The strengthened dollar put additional weight on rival oilseed markets making US exports expensive for importers.

The weakening ringgit coupled with the removal of export duty has improved exports demand for overseas buyers, shown in the ITS and SGS reports,

Indonesia and Malaysia are fighting a tax war as both aim to increase overseas sales of palm oil products through cutting export tariffs.

Indonesian government officials announced if crude palm oil prices drop below US$750 a tonne, then it plans to cut export tax to zero, which is expected next month, according to Reuters.

Indonesian exports of crude palm oil fell 6.5 per cent in September, due to drop in demand for overseas markets; the first drop since April, which could provide an incentive to cut export duty.

Following the FCPO daily chart, on Monday, prices dropped from last Friday and reached a more than a one week low due to tracking fragile soybean markets, coupled with technical alteration as sellers gained momentum, according to Reuters.

Exports figures released showed increasing overseas exports, however did not support the price.

On Tuesday, the price rose as news of exports demand increasing; begun supporting the price, while overseas soy markets improved coupled with a weakening ringgit.

On Wednesday, the price edge higher as a report from the MPOA estimated production decreasing during the first 20 days of September, by 12.2 per cent, would help offset the build-up of inventories.

On Thursday, price rose, reaching a six week high, due to overseas demand increasing while production slowed.

On Friday, prices rose slightly due to positive export news. However, the price retreated owed to by profit-taking before the weekend, according to Reuters.

Technical analysis

According to weekly FCPO chart, the price climbed for fourth consecutive week.

The price could continue to climb and try and test middle bollienger band range 2,250 to 2,300.

According to the daily FCPO chart, on Monday, the price continued to drop from last Friday, breaking below support line 2,090, reaching one week low at 2,064, while bouncing top bollienger band.

By close, the price recovered, closing below 2,090. On Tuesday, the price broke above 2,090 and the middle bollienger band.

On Wednesday, the price tested resistance line 2,150 and closed above, while continuing to hover between the top and middle bollienger band.

On Thursday, the price rose, breaking second resistance line 2,190 and touched a six week high, as the price tested top bollienger band, the price closed above 2,190.

On Friday, the price fell lower, closing below 2,190, as the price bounced top bollienger band.

By observing the daily FCPO chart, the price could range between the middle bollienger band and top bollienger band 2,070-2,220.

The price could test 2,200, if does not break could fall lower, with potential to test 2,150.

Resistance lines will be place at 2,210 and 2,250, while support lines will be place at 2,150 and 2,120. These lines will be observed.

Fundamental analysis

ITS and SGS report on September 30 (Tuesday).

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.