Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives soared this week due to the rising demand for tropical oil and the relief from the uncertainties in the eurozone countries.
The benchmark FCPO
September contract surged RM105 or 3.69 per cent to close at RM2,953 per
tonne on Friday from RM2,848 per tonne last Friday.
range for the week was from RM2,869 to RM3,062. Total volume traded for
the week amounted to 187,549 contracts, up 47,536 contracts from the
The open interest as at Thursday decreased to 94,528 contracts from 97,885 contracts the previous Thursday. The
palm oi l market started the week with a positive tone after the
proausterity parties in Greece won the election on Sunday, reducing the
fear that the country might need to exit from the eurozone.
leaders of the Group of 20 countries indicated they would act together
to strengthen the economic recovery, to promote job growth and to
address the financial market tensions during their meeting in Mexico
from June 18 to June 19.
In addition, the US Department of
Agriculture (USDA) released its weekly crop progress report on Monday
saying that 56 per cent of soybean crop was in good to excellent
condition as of Sunday, declined from 60 per cent the previous week due
to dry weather condition in US.
Some weather forecast reports
indicated the US weather would remain dry in few areas in Midwest next
week which might further deteriorate the corn and soybean crop condition
in those areas.
Cargo surveyor ITS released the palm oil export
fi gures for the period of June 1 to June 20 on Wednesday at 991,917
tonnes, a surge of 15.03 per cent while another surveyor SGS at 996,662
tonnes, an increase of 15.15 per cent from the same period last month.
The exports demand was expected to remain strong for the rest of June approaching the fasting month of the Muslim in mid-July.
easing fear of the uncertainties in eurozone area coupled with the
strong palm oil fundamental boosted the palm oil prices to jump more
than RM200 from the previous week’s low just within the first three days
of the week.
However, a series of weak economic data from the US,
European countries and China indicated the global economy was still
slowing down coupled with the credit rating downgrade on 15 global banks
by Moody on Thursday remained a concern among the traders.
development of the US weather and the debt issue in Spain and Italy
needed to be monitored closely as well as it would give an impact on
palm oil prices in the coming weeks.
benchmark September contract rebounded strongly during the beginning of
the week and vulnerable for profit taking activities after the market
rose too fast, leaving two gaps behind.
Based on the latest
development of the chart, we believe RM2,838 level was very likely to be
the low for the current downtrend. In our view, the palm oil prices
should be slowly elevated from the current range.
Resistance was pegged at RM3,039 and RM3,083 while support was set at RM2,900 and RM2,838.
Major fundamental news this coming week
export data for June 1 to June 25 by ITS and SGS on June 25 and the
export figure for the full month of June by ITS on June 30.