Technical Analysis for FCPO, FCPO Daily Chart Source: BursaStation Professional

20/05/2013 (Borneo Post) - Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives rose this week in anticipation of better exports growth in the second half of May.

The benchmark FCPO August contract rose RM17 or 0.73 per cent to settle at RM2,336 per tonne on Friday from RM2,319 per tonne last Friday. The trading range for the week was from RM2,277 to RM2,342.

Total volume traded for the week amounted to 169,143 contracts, up 48,566 contracts from the previous week.

The open interest as at Thursday increased to 177,850 contracts from 167,552 contracts the previous Thursday.

The exports demand for the first half of May showed some improvements compared with the first 10 days of May.

The improvements in exports were mainly led by the European Union (EU) countries which showed an increase of more than 50 per cent in their exports for the first half of May versus the same period in April.

However, the palm oil exports to other top importing countries like China and India remained sluggish.

The cargo surveyor Intertek Testing Services (ITS) released the palm oil export figures for the period of May 1 to 15 on Wednesday at 599,300 tonnes, a fall of 7.55 per cent while another surveyor SGS released figures at 611,277 tonnes, a decrease of 2.97 per cent from the same period last month.

Some analysts were optimistic on the exports demand in the coming months amid the upcoming Muslim festival in August.

In addition, the rising temperature in top importing countries facing the upcoming summer season may also boost the demand for palm oil given the huge discount between the palm oil and soybean oil prices.

The palm oil production was also expected to be lower in May, thus it may further reduce the stock level this month. The tight near term soybean supplies was underpinned by the soybean prices which may be also support the palm oil prices.

Traders were currently monitoring closely on the weather developments in US to gauge the potential outcome of the grain production this year.

As of now, the planting progress for corn and soybean were way behind the average progress for the past five years due to wet weather.

Farmers were able to speed up some planting these few days because of warm and mostly dry weather before heavy rains which is set to occur again during the weekend.

The Malaysian government announced on Wednesday that the crude palm oil export tax for June would remain at 4.5 per cent.

Technical View  
The benchmark August contract rose this week in anticipation of improving palm oil exports demand coupled with technical buying.

The palm oil prices tested the resistance of RM2,335 twice this week and was able to close just RM1 above the level. The prices are expected to remain firm and supportive this week.

However, the prices must be able to remain above RM2,335 and preferably to break above ema50 this week in order to gain more buying momentum.

Otherwise, the prices would be stuck in the sideway trading range again.

Resistance was pegged at RM2,400 and RM2,467 while support were set at RM2,300 and RM2,217.

Major Fundamental News This Coming Week
Malaysian export data for May 1 to 20 by ITS and SGS on May 20 and the export figure for May 1 to 25 by ITS on May 25.

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.