MARKET DEVELOPMENT
Crude Palm Oil Weekly Report – 22 July 2017
Crude Palm Oil Weekly Report – 22 July 2017
24/07/2017 (Borneo Post) - Malaysian palm oil futures pared gain after recording a two-week low on higher production outlook, as the market recovered on the back of strengthening related edible oils and tracking stronger export data from cargo surveyors reports.
The benchmark crude palm oil futures (FCPO) contracted 0.23 per cent to RM2,572 on Friday, which was RM6 higher than RM2,566 during the previous week.
The total trading volume from Monday to Thursday dropped 15.28 per cent with 137,357 contracts traded, comparing with 162,132 contracts traded during last Monday to Thursday.
However, total open interest from Monday to Thursday increased 1.6 per cent to 868,330 contracts from 854,674 contracts during last Monday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products for July 1 to 20 rose 10.5 per cent to 796,664 tonnes, from 721,020 tonnes shipped during June 1 to 20.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during July 1 to 20 rose 15.2 per cent to 817,961 tonnes from 710,322 tonnes shipped during June 1 to 20.
Both cargo surveyor data showed rising export demand for palm oil related products. Meanwhile, forecasts of stronger demand from China also helped to support the market.
China is expected to import 450,000 tonnes of palm oil per month in August and September, compared with a forecast of 250,000 tonnes for July.
According to China National Grain and Oils Information Centre (CNGOIC), Chinese traders ordered seven palm oil cargoes of around 80,000 tonnes on Tuesday due to lower prices in overseas markets.
Spot ringgit appreciated 0.17 per cent to 4.2855 against the US dollar this week, compared to 4.2930 on last Friday. The dollar’s losses against the yen were mitigated by market expectations that the Bank of Japan will keep its massive stimulus programme in place far longer than other major central banks amid stubbornly weak inflation.
On Monday, Malaysian palm oil futures slipped as a stronger ringgit and expectations for higher production offset data which showed an increase in export shipments.
On Tuesday, Malaysian palm oil futures fell to a two-week low in late trade, dropping nearly one per cent as the market was weighed down by expectations of rising production.
On Wednesday, Malaysian palm oil futures rebounded from losses in the evening trade, lifted from an earlier two-week low by expectations of stronger cargo surveyor data due to be released on Thursday.
On Thursday, Malaysian palm oil futures surged two per cent, rising to a one-week high and recovering from a two-week low in the previous session, on the back of strengthening related edible oils.
On Friday, Malaysian palm oil futures fell during the late trade, easing from a more than one-week high reached earlier that session, as the market tracked declines in soyoil on the Chicago Board of Trade.
Technical analysis
According to the FCPO daily chart, the market rebounded after it failed to break through the psychological price level at 2,500.
After two consecutive days of losses, the market surged from the two-week low and held at the resistance level of 2,590. On Monday, Malaysian palm oil futures pared its earlier gains and ended the day in negative territory, with the benchmark contracting 27 points lower at 2,539.
On Tuesday, Malaysian palm oil futures traded lower for two consecutive days and fell to the one-week low since July 11, 2017, with the benchmark contract at 2,512, which was 27 points lower than the previous closing price.
On Wednesday, Malaysian palm oil futures traded higher after failing to hold below the psychological level of 2,500, with the benchmark contract closed at 2,523, which was 11 points higher than the previous closing price.
On Thursday, Malaysian palm oil futures gapped up and rose sharply during the late trade, with the benchmark contract closed at 2,577, which was 54 points higher than the previous closing price.
On Friday, Malaysian palm oil futures traded lower after the sharp increase on yesterday, with the benchmark contract closed at 2,572, which was five points lower than the previous closing price.
According to the chart above, the market bounced back after touching the middle Bollinger band.
The Bollinger bands are trending upward as displayed in the chart which showed a potential bullish trend.
A successful upper band breakout might indicate the ranging market has ceased and an uptrend is starting to take place. Resistance lines will be positioned at 2,610 and 2,660, whereas support lines will be positioned at 2,500 and 2,440. These levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS reports will be released on July 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.
The benchmark crude palm oil futures (FCPO) contracted 0.23 per cent to RM2,572 on Friday, which was RM6 higher than RM2,566 during the previous week.
The total trading volume from Monday to Thursday dropped 15.28 per cent with 137,357 contracts traded, comparing with 162,132 contracts traded during last Monday to Thursday.
However, total open interest from Monday to Thursday increased 1.6 per cent to 868,330 contracts from 854,674 contracts during last Monday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products for July 1 to 20 rose 10.5 per cent to 796,664 tonnes, from 721,020 tonnes shipped during June 1 to 20.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during July 1 to 20 rose 15.2 per cent to 817,961 tonnes from 710,322 tonnes shipped during June 1 to 20.
Both cargo surveyor data showed rising export demand for palm oil related products. Meanwhile, forecasts of stronger demand from China also helped to support the market.
China is expected to import 450,000 tonnes of palm oil per month in August and September, compared with a forecast of 250,000 tonnes for July.
According to China National Grain and Oils Information Centre (CNGOIC), Chinese traders ordered seven palm oil cargoes of around 80,000 tonnes on Tuesday due to lower prices in overseas markets.
Spot ringgit appreciated 0.17 per cent to 4.2855 against the US dollar this week, compared to 4.2930 on last Friday. The dollar’s losses against the yen were mitigated by market expectations that the Bank of Japan will keep its massive stimulus programme in place far longer than other major central banks amid stubbornly weak inflation.
On Monday, Malaysian palm oil futures slipped as a stronger ringgit and expectations for higher production offset data which showed an increase in export shipments.
On Tuesday, Malaysian palm oil futures fell to a two-week low in late trade, dropping nearly one per cent as the market was weighed down by expectations of rising production.
On Wednesday, Malaysian palm oil futures rebounded from losses in the evening trade, lifted from an earlier two-week low by expectations of stronger cargo surveyor data due to be released on Thursday.
On Thursday, Malaysian palm oil futures surged two per cent, rising to a one-week high and recovering from a two-week low in the previous session, on the back of strengthening related edible oils.
On Friday, Malaysian palm oil futures fell during the late trade, easing from a more than one-week high reached earlier that session, as the market tracked declines in soyoil on the Chicago Board of Trade.
Technical analysis
According to the FCPO daily chart, the market rebounded after it failed to break through the psychological price level at 2,500.
After two consecutive days of losses, the market surged from the two-week low and held at the resistance level of 2,590. On Monday, Malaysian palm oil futures pared its earlier gains and ended the day in negative territory, with the benchmark contracting 27 points lower at 2,539.
On Tuesday, Malaysian palm oil futures traded lower for two consecutive days and fell to the one-week low since July 11, 2017, with the benchmark contract at 2,512, which was 27 points lower than the previous closing price.
On Wednesday, Malaysian palm oil futures traded higher after failing to hold below the psychological level of 2,500, with the benchmark contract closed at 2,523, which was 11 points higher than the previous closing price.
On Thursday, Malaysian palm oil futures gapped up and rose sharply during the late trade, with the benchmark contract closed at 2,577, which was 54 points higher than the previous closing price.
On Friday, Malaysian palm oil futures traded lower after the sharp increase on yesterday, with the benchmark contract closed at 2,572, which was five points lower than the previous closing price.
According to the chart above, the market bounced back after touching the middle Bollinger band.
The Bollinger bands are trending upward as displayed in the chart which showed a potential bullish trend.
A successful upper band breakout might indicate the ranging market has ceased and an uptrend is starting to take place. Resistance lines will be positioned at 2,610 and 2,660, whereas support lines will be positioned at 2,500 and 2,440. These levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS reports will be released on July 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.