Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week slightly lower due to the weaker exports demand and the rising palm oil production in July.
The benchmark FCPO October contract
slipped RM9 or 0.31 per cent to close at RM2,918 per tonne on Friday
from RM2,927 per tonne last Friday.
The trading range for the week was from RM2,905 to RM3,007.
Total volume traded for the week amounted to 124,383 contracts, down 47,485 contracts from the previous week.
The open interest as at Thursday increased to 115,084 contracts from 106,686 contracts the previous Thursday.
palm oil market was lifted earlier in the week with the anticipation of
continuous hot and dry weather pattern in US but the sentiment changed
during the mid-week when the weather forecast indicated some beneficial
rains would bring relief to some parts of the hot and dry area in the
Midwest over the weekend.
There will be forecast for continuous
rains late next week and would bring the needed moisture to the soil
especially for soybean crop.
Most analysts commented the rains
came in too late for the corn but may revive some of the soybean crops
as the soybean crops are in the key development period currently.
weekly crop progress report released by US Department of Agriculture
(USDA) on Monday indicated the crop condition further deteriorating with
the soybean crop was 29 per cent in good to excellent condition,
reducing from 31 per cent the previous week.
The palm oil market
was also pressured later of the week when the US Federal Reserve
dampened the hope of the implementation of the quantitative easing
during the Federal Open Market Committee (FOMC) meeting on Wednesday as
the US economic data was not weak enough for them to take further
The market was also disappointed with the European Central
Bank (ECB) when they failed to take immediate action to tackle the
eurozone debt crisis on Thursday versus the ECB chief’s comments that
the central bank would do everything to defend the euro in the previous
Cargo surveyor ITS released the palm oil export figures for
the full month of July on Tuesday at 1,234,603 tonnes, a drop of 14.81
per cent while another surveyor SGS at 1,193,227 tonnes, a fall of 18.49
per cent from the same period last month.
government announced on Wednesday to increase the duty-free crude palm
oil exports quota to 5.6 million tonnes from 3.6 million tonnes in a
temporary move to counter the weak exports demand and to manage the palm
oil stockpiles during the high production cycle.
benchmark October contract was trading sideways this week and very
likely would remain the same for next week as most traders would
position themselves ahead of the key major reports to be released next
The downside of the market may be limited as most analysts
anticipated tighter global soybean stocks in next Friday’s report while
the market would be capped at higher level due to the potential rains
forecast later of next week.
Resistance would be pegged at RM3,007 and RM3,067 while support was set at RM2,880 and RM2,838.
Major fundamental news this coming week
monthly supply demand report on August 10, Malaysian export data for
August 1-10 by ITS and SGS on August 10 and USDA’s monthly supply-demand
report on August 10.
Courtesy of OPF