31/10/2016 (Borneo Post) - Malaysian palm oil futures securing their third weekly gain and closed at 2,789, supported by bullish sentiment and strong fundamentals while market staying on the sidelines ahead of cargo surveyor export report.

Crude palm oil futures (FCPO) benchmark January 2016 contract settled at 2,788 on Friday, up 64 points or 2.3 per cent from 2,724 last Friday.

Trading volume decreased to 214,642 contracts from 215,483 contracts from last Monday to Thursday.

Open interest based increased to 797,659 contracts from 795,645 contracts from last Monday to Thursday.

Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during October 1 to 25 fell 10.9 per cent to 990,939 tonnes compared with 1.112 million tonnes during September 1 to 25.

Socete Generale de Surveillance (SGS) report showed that Malaysia’s palm oil exports during October 1 to 25 fell 10.9 per cent to 998,101 tonnes compared with 1.12 million tonnes during September 1 to 25.

Overall, demand increase from Europe Union while demand remained weakened from India and China. Spot ringgit has slumped 0.3 per cent to 4.1970 as lower crude prices and solid U.S. economic data cemented expectations of a Federal Reserve’s interest rate hike in December.

Southern Palm Oil Millers Association released data noting a 2.83 per cent increase in production for the October 1 to 25 period.

Indonesia’s energy ministry said on Friday that Indonesia has allocated 1.53 million kilolitres of biodiesel for procurement during November 2016 to April 2017 to PT Pertamina and PT AKR Corporindo.

On Monday, the price rose as competing vegetable oil gains support the market bullish sentiment.

On Tuesday, the price fell from two-year high as market weighed by stronger ringgit and weak export expectation.

On Wednesday, the price rose as tracking rival oil market gains and production data released was within market expectations.

On Thursday, the crude palm oil market fell as tracking oversea rival oil markets losses offset benefits from a weaker ringgit.

On Friday, the price closed almost unchanged as market staying on the sidelines ahead of cargo surveyor export report.

Technical analysis

According to the weekly FCPO chart, weekly candlestick opened higher and attempted to test the upper Bollinger Band. By the end of the week, MACD remained above zero line and signaled that the current uptrend remained valid in the long term.

On Monday, the price rose and closed above the upper Bollinger Band which might indicate that current market stay at overbought condition. MACD remained to stand above zero line and signaled that current uptrend remained valid.

On Tuesday, the price fell and retraced back from the upper Bollinger Band and current market stayed away from overbought condition.

On Wednesday, Bollinger Bands showed expanding sign which could indicate an increase in price volatility.

On Thursday, the price fell as Bollinger Bands showed further expanding sign and indicate that the current market price might continue to stay in a volatile condition. MACD continued to stand above zero line, indicating that current uptrend remained valid.

On Friday, the price rose as the middle and upper Bollinger Band continued moving upward which indicated that the uptrend movement could remain in the short term.

In the coming week, the price has potential to range between 2,865 and 2,680.  Resistance lines will be placed at 2,865 and 2,825, support lines will be positioned at 2,715 and 2,680, these levels will be observed in the coming week.

Major fundamental news this coming week

ITS and SGS report released on October 31 (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.