MARKET DEVELOPMENT
Crude Palm Oil Weekly Report – 9 May 2015
Crude Palm Oil Weekly Report – 9 May 2015
11/05/2015 (Borneo Post) - Malaysian palm oil futures edged lower on Friday to 2,162, due to investors profit taking before the weekend and the Malaysian Palm Oil Board (MPOB) releasing its report this coming Monday, coupled with weakness in competing oil markets.
Future Crude Palm Oil (FCPO) benchmark July 2015 contract settled at 2,162 on Friday, up 59 points or 2.8 per cent from 2,103 last Thursday. Trading volume decreased to 122,513 contracts from 137,934 contracts from last Tuesday to Thursday.
Open interest based on Thursday increased to 551,315 contracts from 547,811 contracts from last Tuesday to Thursday.
Spot ringgit weakened on Friday to 3.595, ending a six-week rally, due to a drop in crude prices which raised concerns on the deteriorating government’s finances in the oil-exporting nation.
Indonesian President Joko Widodo signed a regulation requiring exporters to pay a levy of US$50 per tonne of crude palm oil and US$30 for processed palm oil product shipments, an energy ministry official said on Wednesday.
The regulation, announced in late March, will fund Indonesia’s recently announced biodiesel subsidies and may help boost palm prices through increased demand for biodiesel.
The regulation will take effect by the third week of May at the latest, the chief economic minister said.
The median forecast from six planters, traders and analysts suggested that Malaysia’s palm inventories rose 14.3 per cent from March to 2.13 million tonnes in April, bringing them to their loftiest level since November.
The poll forecast crude palm oil output in April rose 11.5 per cent to 1.67 million tonnes, overtaking export shipments, which were forecast to be 1.22 million tonnes, up just 3.3 per cent from March.
According to a Reuters Poll, Malaysian palm oil stocks could reach a five-month high, up 14.3 per cent to 2.13 million tonnes as crude palm output continued to climb and outpace export demand in April.
Malaysian palm oil production could increase 11.5 per cent to 1.67 million tonnes, while Malaysian palm oil exports could climb 3.3 per cent to 1.22 million tonnes.
On Tuesday, the price rose, due to a sliding ringgit paired with tracking strengthening soyoil markets in the US and China.
On Wednesday, the price climbed for a third consecutive day, touching the highest level in a month, as investors covered short positions after Indonesia set a palm export levy to fund biodiesel subsidies, paired with rallying overseas soy markets. On Thursday and Friday, the price fell, as comparative overseas soy markets weakened. Investors were also anxious over an oversupply in end-stocks, coupled with traders squaring positions before the weekend and the MPOB report expected this coming Monday.
Technical analysis
According to the weekly FCPO chart, the price opened between bottom and middle Bollinger band, and within previous week sideways range 2,135 to 2,195.
The price rose initially, testing the psychological barrier at 2,200. By the end of the week, the price closed within sideways range, while the SO remained in oversold territory.
According to the daily FCPO chart, on Tuesday, the price opened above middle Bollinger band, and the resistance line at 2,140, and within previous consolidation range of 2,135 to 2,195. The SO exits oversold territory.
An upside gap was formed indicating that the previous attempt to break below consolidation range could have failed, and further increased the potential to test the psychological barrier at 2,200 in the near term. In the later session, the price fell, testing the middle Bollinger band and the resistance line at 2,140, closing above.
On Wednesday, the price tested the psychological barrier at 2,200, and the top Bollinger band, while attempting to break above consolidation range of 2,135 to 2,195. By the later session, the price closed below the resistance line at 2,190 and top Bollinger band.
On Thursday and Friday, the price opened lower, within the consolidation range, as the price continued to rebound after testing the psychological barrier at 2,200 the previous day.
The price tested the middle Bollinger band and the resistance line at 2,140, closing above.
In the coming week, the price has potential to range between the consolidation range of 2,135 and 2,195.
Resistance lines will be placed at 2,220 and 2,250 and, while support lines will be positioned at 2,110 and 2,070. Tthese levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS report released on May 11 and 15 (Monday and Friday).
MPOB report released on May 11 (Monday).
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.
Future Crude Palm Oil (FCPO) benchmark July 2015 contract settled at 2,162 on Friday, up 59 points or 2.8 per cent from 2,103 last Thursday. Trading volume decreased to 122,513 contracts from 137,934 contracts from last Tuesday to Thursday.
Open interest based on Thursday increased to 551,315 contracts from 547,811 contracts from last Tuesday to Thursday.
Spot ringgit weakened on Friday to 3.595, ending a six-week rally, due to a drop in crude prices which raised concerns on the deteriorating government’s finances in the oil-exporting nation.
Indonesian President Joko Widodo signed a regulation requiring exporters to pay a levy of US$50 per tonne of crude palm oil and US$30 for processed palm oil product shipments, an energy ministry official said on Wednesday.
The regulation, announced in late March, will fund Indonesia’s recently announced biodiesel subsidies and may help boost palm prices through increased demand for biodiesel.
The regulation will take effect by the third week of May at the latest, the chief economic minister said.
The median forecast from six planters, traders and analysts suggested that Malaysia’s palm inventories rose 14.3 per cent from March to 2.13 million tonnes in April, bringing them to their loftiest level since November.
The poll forecast crude palm oil output in April rose 11.5 per cent to 1.67 million tonnes, overtaking export shipments, which were forecast to be 1.22 million tonnes, up just 3.3 per cent from March.
According to a Reuters Poll, Malaysian palm oil stocks could reach a five-month high, up 14.3 per cent to 2.13 million tonnes as crude palm output continued to climb and outpace export demand in April.
Malaysian palm oil production could increase 11.5 per cent to 1.67 million tonnes, while Malaysian palm oil exports could climb 3.3 per cent to 1.22 million tonnes.
On Tuesday, the price rose, due to a sliding ringgit paired with tracking strengthening soyoil markets in the US and China.
On Wednesday, the price climbed for a third consecutive day, touching the highest level in a month, as investors covered short positions after Indonesia set a palm export levy to fund biodiesel subsidies, paired with rallying overseas soy markets. On Thursday and Friday, the price fell, as comparative overseas soy markets weakened. Investors were also anxious over an oversupply in end-stocks, coupled with traders squaring positions before the weekend and the MPOB report expected this coming Monday.
Technical analysis
According to the weekly FCPO chart, the price opened between bottom and middle Bollinger band, and within previous week sideways range 2,135 to 2,195.
The price rose initially, testing the psychological barrier at 2,200. By the end of the week, the price closed within sideways range, while the SO remained in oversold territory.
According to the daily FCPO chart, on Tuesday, the price opened above middle Bollinger band, and the resistance line at 2,140, and within previous consolidation range of 2,135 to 2,195. The SO exits oversold territory.
An upside gap was formed indicating that the previous attempt to break below consolidation range could have failed, and further increased the potential to test the psychological barrier at 2,200 in the near term. In the later session, the price fell, testing the middle Bollinger band and the resistance line at 2,140, closing above.
On Wednesday, the price tested the psychological barrier at 2,200, and the top Bollinger band, while attempting to break above consolidation range of 2,135 to 2,195. By the later session, the price closed below the resistance line at 2,190 and top Bollinger band.
On Thursday and Friday, the price opened lower, within the consolidation range, as the price continued to rebound after testing the psychological barrier at 2,200 the previous day.
The price tested the middle Bollinger band and the resistance line at 2,140, closing above.
In the coming week, the price has potential to range between the consolidation range of 2,135 and 2,195.
Resistance lines will be placed at 2,220 and 2,250 and, while support lines will be positioned at 2,110 and 2,070. Tthese levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS report released on May 11 and 15 (Monday and Friday).
MPOB report released on May 11 (Monday).
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.