Crude Palm Oil Weekly Report – March 24, 2018
Malaysian palm oil futures racked up gains, underpinned by improved demands from stronger export data, notably demands for the Ramadan festivities, as well as a victory from an appeal against the European Union.
There was also the resumption of the temporarily abolished export tax which will be due on April which has also helped in boosting gains.
The benchmark crude palm oil futures (FCPO) contract rose 0.33 per cent to RM2,426 on Friday, which was RM8 higher than RM2,418 during the previous week.
The average daily trading volume during Monday to Thursday decreased 5.95 per cent with a total average of 57,970 contracts traded, as compared with total average of 54,519 contracts traded during last Monday to Thursday.
Daily average open interest during Monday to Thursday rose 6.04 per cent to 222,460 contracts from 236,776 contracts during last Monday to Thursday.
AmSpec reported that export of Malaysian palm oil products for March 1 to 20 rose 15.3 per cent to 913,091 tonnes, from 791,992 tonnes shipped during February 1 to 20.
Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during March 1 to 20 rose 13.6 per cent to 926,185 tonnes from 815,183 tonnes shipped during February 1 to 20.
The Muslim holy month sees devotees break day-long fasts with communal feasting, which incurs higher usage of palm oil for cooking purposes. Buyers usually start increasing purchases of palm oil one to two months ahead of the festivities. News that Indonesia had won an appeal against the European Union in a trade dispute over biodiesel, lifted the market. EU’s Court of Justice (COJ) ruled that the bloc must eliminate anti-dumping duties on imports of Indonesian biodiesel products. Malaysia set its crude palm oil export tax at five per cent from April after a three-month suspension implemented at the start of the year, a government circular showed on Thursday.
Spot ringgit appreciated 0.028 per cent to 3.9130 against the US dollar, compared to 3.9240 on last Friday.
Asian markets plunged on Friday following a sell-off in New York as President Donald Trump sparked fresh trade war fears by imposing huge tariffs on Chinese imports and Beijing unveiled its own measures against US goods.
Technical analysis
According to the FCPO daily chart, FCPO went into consolidation phase despite it broke first resistance points at 2,445 on Thursday.
On Monday, FCPO ended at 2,427, nine points higher than the previous close of 2,418, with a traded volume of 21,084.
On Tuesday, FCPO ended at 2,439, 12 points higher than the previous close of 2,427, with a traded volume of 23,204. On Wednesday, FCPO ended at 2,446, seven points higher than the previous close of 2,439, with a traded volume of 24,627.
On Thursday, FCPO broke out of the first resistance level at 2,445 and ended at 2,447, one point above the previous close of 2,446.
On Friday, FCPO ended at 2,426, 21 points lower than the previous close of 2,447, with a traded volume of 22,139.
Based on the daily candlesticks chart, FCPO is experiencing consolidation phase as both buyers and sellers are trying to gain an upper hand. Although Moving Average Convergence Divergence (MACD) suggested that the price might be bullish and having an upward momentum. We still expect the price might rebound and went downward to test the first support points at 2,407.
This coming week, aggressive traders could initiate short positions while conservative traders might want to wait for a stronger confirmation entry as current market direction still unclear.
Resistance lines will be positioned at 2,445 and 2,458, whereas support lines will be at 2,407, and 2,350. These levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS reports will be released on March 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.