Crude Palm Oil Weekly Report – May 26, 2018

Malaysian palm oil futures ended mixed this week despite achieved a seven- week high due to numerous factors, notably the strengthening of US’ soybean oil and crude oil prices as well as the weaker ringgit.

However, this was offset by weak exports data.

The benchmark crude palm oil futures (FCPO) contract rose 0.24 per cent to RM2,455 on Friday, which is RM6 higher than RM2,449 during the previous week.

The average daily trading volume during Monday to Thursday decreased 24.45 per cent with a total average of 38,425 contracts traded, as compared with total average of 50,861 contracts traded during last Monday to Thursday.

Daily average open interest during Monday to Thursday increased 0.22 per cent to 238,277 contracts from 237,751 contracts during last Monday to Thursday.

AmSpec reported that exports of Malaysian palm oil products for May 1 to 25 fell 15 per cent to 983,656 tonnes, from 1.157 million tonnes shipped during April 1 to 25.

Societe Generale de Surveillance (SGS) reported that exports of Malaysian palm oil products during May 1 to 25 fell 13.5 per cent to 1.004 million tonnes from 1.161 million tonnes shipped during April 1 to 25.

Palm oil exports from Malaysia, the world’s second- largest producer and exporter, dropped 20.9 per cent between May 1 and 20 compared with the corresponding period in April, inspection company AmSpec Agri Malaysia reported. Cargo surveyor Societe Generale de Surveillance said shipments fell 18 per cent in the same period.

Data from the Malaysian Palm Oil Board (MPOB) showed that April output in the Southeast Asian country dipped by one per cent to 1.56 million tonnes from a month earlier but was still the highest April level since 2015.

Crude oil prices slipped, under pressure from a potential increase in OPEC crude output to cool the market’s recent rally and cover any shortfalls in supply from Iran and Venezuela.

Meanwhile, the Chicago July soybean oil contract jumped 1.4 per cent on Monday, tracking rallies in soybean prices after the US and China agreed to drop tariff threats as they work on a wider trade agreement.

Spot ringgit depreciated 0.19 per cent to 3.9845 against the US dollar, compared to 3.977 on last Friday.

The euro slipped on Friday and is set for the sixth consecutive week of losses as concerns over Italy’s debt outlook weighed on sentiments, although losses were checked after North Korea said it was still open to resolving issues with US. Technical analysis

According to the FCPO daily chart, FCPO erased earlier gains on Friday despite achieved a seven-week high, previously.

On Monday, FCPO ended at 2,445, four points higher than the previous close of 2,449, with a traded volume of 17,181.

On Tuesday, FCPO ended at 2,474, 29 points higher than the previous close of 2,445, with a traded volume of 16,908.

On Wednesday, FCPO ended at 2,473, one point lower than the previous close of 2,474, with a traded volume of 13,965.

On Thursday, FCPO ended at 2,490, 17 point higher than the previous close of 2,473, with a traded volume of 15,059.

On Friday, FCPO ended at 2,455, 35 point lower than the previous close of 2,490, with a traded volume of 19,947.

Based on the daily candlesticks chart, FCPO might retest first support level at 2,447. If it fails to break 2,447, then it might rebound and retest the first resistance level at 2,482.

Otherwise, it may slips towards the second support level at 2,433. In the coming week, traders are advised to hold their current position and observe next week’s market direction for further action.

Resistance lines will be positioned at 2,482 and 2,498, whereas support lines will be at 2,447, and 2,433. These levels will be observed in the coming week. Major fundamental news this coming week AmSpec and SGS reports will be released on May 30.

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.