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.
The 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.
The 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 action.
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 week.
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.
The Malaysian 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.
Technical View
The 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 Friday.
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
MPOB’s 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
