02/11/2015 (Borneo Post) - Malaysian palm oil futures edged lower on Friday to 2,362, as market players were profit taking before the weekend.

Future Crude Palm Oil (FCPO) benchmark January 2016 contract settled at 2,362 on Friday, up 36 points or 1.5 per cent from 2,326 last Friday.

Trading volume decreased to 182,905 contracts from 194,996 contracts from last Monday to Thursday.

Open interest based decreased to 749,438 contracts from 752,225 contracts from last Monday to Thursday.

Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during October 1 to 25 decreased 9.2 per cent to 1.2 million tonnes compared with 1.322 million tonnes during September 1 to 25.

Societe Generale de Surveillance’s (SGS) report showed that Malaysia’s palm oil exports during October 1 to 25 decreased 8.4 per cent to 1.226 million tonnes compared with 1.339 million tonnes during September 1 to 25.

Overall, demand strengthened from the US, India, and Pakistan, while demand weakened from the EU and China

Spot ringgit weakened on Friday to 4.2920, as Fitch Ratings’ warning that Malaysia may miss its fiscal deficit reduction target added to concern higher US interest rates will spur more capital outflows.

On Monday, the price fell for a 2nd consecutive day, touching a one-week low, as global export demand for palm oil remained sluggish.

On Tuesday, Wednesday, and Thursday, the price rose, touching the highest in a week, and ending two consecutive days of declines, while continuing to remain range-bound, as the price was supported by a weakening ringgit, and tracking other vegetables oils, although gains were trimmed by concerns over slowing global demand for the tropical product and higher production.

On Friday, the price fell, ending three successive days of gains, as market players were profit taking before the weekend.

Technical analysis

According to the weekly FCPO chart, the price opened above the middle Bollinger band and psychological barrier 2,300. By the end of the week, the price tested the psychological barrier 2,300, closing above.

According to the daily FCPO chart, on Monday, the price opened above the psychological barrier at 2,300, and below the middle Bollinger band. By the later session, the price tested the support level at 2,290 and the middle Bollinger band, closing below. Daily volume was below the average daily volume.

On Tuesday, the price opened below the middle Bollinger band and support level at 2,290. A downside gap was formed from 2,260 to 2,280, which may be covered or indicate downward pressure towards the psychological barrier at 2,200.

By the later session, the previous gap was covered, while the price tested psychological barrier 2,300, closing above, and tested the middle Bollinger band, closing below. Daily volume was below the average daily volume.

On Wednesday, the price opened below the middle Bollinger band, and above the psychological barrier at 2,300.

A downside gap was formed from 2,310 to 2,320, which might be covered or indicate selling momentum towards psychological barrier 2,300.

By the later session, the previous gap was covered, while the price tested the psychological barrier 2,300 and tested the middle Bollinger band, closing above. A bullish hanging man candlestick was formed, indicating potential to test psychological barrier 2,400 in near term.

On Thursday, the price opened above middle Bollinger band. An upside gap was formed from 2,340 to 2,355, which might be covered or indicate potential to test the resistance level at 2,390 in the near term.

By the later session, the previous gap was covered, while the price tested the middle Bollinger band, closing above. Daily volume was above the average daily volume.

On Friday, the price opened above the middle Bollinger band, and the SO entered overbought territory. A downside gap was formed from 2,360 to 2,370, which might be covered or indicate buying momentum towards the psychological barrier at 2,400.

By the later session, the previous gap was covered, while the price tested middle Bollinger band, closing above.

This coming week, the price has potential to range between 2,270 and 2,400. Resistance lines will be placed at 2,390 and 2,450, while support lines will be positioned at 2,310 and 2,250, these levels will be observed in the coming week.

Major fundamental news this coming week

No major fundamental news.