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

17/09/2013 (Borneo Post) - Crude Palm Oil Futures (FCPO) rose slightly higher on Friday due to buying interest surged after prices fell to its lowest in more than three weeks. However, palm oil futures still posted their worst weekly performance in more than two months after forecasts of rising production in Southeast Asia raised concerns over rising inventory levels.

Malaysian Palm Oil Board (MPOB) reported that palm oil end stock for August 2013 rose 0.1 per cent to 1,665,592 tonnes compared with July 2013 at 1,663,788 tonnes. The rise was lesser than the expected from a rise to 1,730,000 tonnes. Meanwhile, palm oil production rose 3.6 per cent to 1,735,292 tonnes compare with July 2013 at 1,674,852 tonnes. The rise was lesser than the expectation from a rise at 1,758,000 tonnes. On the other hand, export rose 7.37 per cent to 1,523,508 tonnes compared with July 2013 at 1,418,960 tonnes. However, the rise was lesser than expected from an increase of 1,530,000 tonnes. Import decreased to 6,950 tonnes compared with July 2013 at 8,151 tonnes. The decrease was better than the expectations of an increase to 42,000 tonnes.

For the first 10 days of August, Intertek Testing Service (ITS) reported that export had increased 10.84 per cent to 462,671 tonnes compared with the previous first 10 days of August 2013 at 417,414 tonnes. Société Générale de Surveillance (SGS) reported that export increased 6.76 per cent to 449,821 tonnes compared to first 10 days of August 2013 at 421,337 tonnes.

Traders and analysts cautioned that inventory levels in Malaysia may climb higher from September onwards as steadily higher production outweighs exports. Moreover, leading industry analyst Dorab Mistry said Indonesia and Malaysia will produce more palm oil seasonally until at least April 2014. Mistry added that this would add to the supply of competing oilseeds and drag palm prices to new lows possibly in January.

Malaysian ringgit has been volatile this week where it shot above the 3.28 level and closed at 3.2880. Initially, US dollar retraced between the 3.25 and 3.27 region due to liquidation but the spot rate rebounded as weak Kuala Lumpur Composite Index (KLCI) and lifting of oil subsidies may weaken the country’s economy outlook as it might spike inflation.

The new benchmark FCPO November contract settled RM2,449 per tonne on Friday which was up by five points from last Friday at RM2,444. The trading range for the week was from RM2,449 to RM2,306.

Total volume traded for the week amounted to 143,162 contracts which was up 13,427 contracts compared to last Friday’s 129,735 contracts.

The open interest as of Thursday totalled to 162,479 tonnes contracts from 161,702 contracts from previous Thursday, an increase of 777 contracts.

Technical View
From the chart, we can see that FCPO price broke our support line (blue line) and since then it triggered technical sell-down throughout the week. Since it fulfilled our violation factor, we believe the market may revisit the consolidation range support line (horizontal black line) in the coming weeks which we are going to keep it as our strong support line.

For the coming week we pegged our important support levels at 2,320, 2,300, 2,260 and 2,215.

Meanwhile, for our resistance levels, we pegged important ones at 2,380, 2,400 and 2,450.

Major fundamental news this coming week
ITS & SGS Export reports –September 15, 2013 (September 17)

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.