Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week higher due to continuous better demand outlook for palm oil despite concerns over the slowdown in the global economic growth.
The benchmark FCPO June contract increased RM28 or 0.82 per cent to close at RM3,426 per tonne on Friday from RM3,398 per tonne last Friday. The trading range for the week was from RM3,334 to RM3,436.
Total volume traded for the week amounted to 131,755 contracts, up 11,254 contracts from the previous week. The open interest as at Thursday decreased to 122,586 contracts from 131,180 contracts the previous Thursday.
Palm oil prices were weaker during the beginning of the week as the export demand growth for the first 20 days of March was much slower than the first 15 days of March.
Cargo surveyor ITS released the palm oil export figures for the period of March 1 to 20 on Tuesday at 894,594 tonnes, an increase of 14.24 per cent while another surveyor SGS at 886,706 tonnes, a rise of 14.01 per cent from the same period last month.
The fall in palm oil prices were exacerbated on Thursday when the PMI Manufacturing in China and Europe especially Germany and France was lower than the previous month.
The indicator for these three countries fell below 50 levels, signaling a slowdown in the economic growth which could reduce the commodities demand.
However, the fundamental for palm oil remained supportive with the reduction in South American soybean output estimates and the anticipation of lower US soybean acreage in 2012 had underpinned the palm oil prices.
Traders would be closely monitoring the grain planting forecasts released by USDA on March 30 which would give the traders information about the intention of the US farmers on the planting acreage of corn, soybean and wheat.
Traders were also concerned on the strike by the Argentina’s truck drivers which could disrupt the soy exports from the third largest soybean exporter in the world.
Indonesia would raise its export tax for crude palm oil from 16.5 per cent to 18 per cent in April which would be beneficial to the Malaysian exporters as the global exportable palm oil supplies would be tightening up.
Technical View
The palm oil prices were weaker during the beginning of the week as some traders were taking their profits off the table ahead of the major fundamental reports which would be released next week. This was in tandem with the reduction of 8,594 contracts in the open interest this week compared with the previous week.
The benchmark June contract turned around from the low of RM3,334 on Thursday and touched the new high of RM3,436 on Friday on strong technical buying and short covering.
However, palm oil prices would be trading more cautiously at high levels approaching the major resistance of RM3,465 to RM3,500 while waiting for more cues from the major fundamental reports next week. Resistance was pegged at RM3,465 while support was set at RM3,350 and RM3,270.
Major fundamental news this coming week
Malaysian export data for March 1 to March 25 by ITS and SGS on March 26, the export data for Mar 1 to March 31 by ITS on March 31 and the Prospective Plantings reports by USDA on March 30.
Credits To Oriental Pacific Futures
IM IN SHORT POSITIONS NOW ( crossing fingger ) SHORT : 3468 WHERE TO CL : 3480-3485 WHERE TO PT : i) at 3423-3413 + ii) 3390-3380
Long ( Hold Huat Huat ) if price come again to 3220+
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