Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives ended the week sharply lower due to the anticipation of higher palm oil stocks level in August and the current US weather condition had stabilised the crop from further deteriorating.
The benchmark FCPO November
contract plunged RM92 or 3.05 per cent to close at RM2,927 per tonne on
Friday from RM3,019 per tonne last Friday.
The trading range for the week was from RM2,895 to RM3,100.
Total volume traded for the week amounted to 196,597 contracts, up 60,870 contracts from the previous week.
The open interest as at Thursday decreased to 114,039 contracts from 126,836 contracts the previous Thursday.
traders liquidated some riskier positions in the palm oil market ahead
of the major fundamental reports to be released next week.
Reuters poll revealed on Wednesday indicating that Malaysian palm oil
stocks were expected to increase 4.5 per cent to 2.09 million tonnes in
August from the previous month as the high production outpaced the rise
According to the poll, the palm oil exports were
estimated to surge 11.8 per cent to 1.45 million tonnes while the
production would fall three per cent to 1.64 million tonnes.
of the top industry analysts, Dorab Mistry provided his view on palm oil
prices during the Global Commodities Conference – Asia 2012 in
Singapore on Thursday saying that palm oil prices was hard to be bullish
given the record palm oil stocks and high production cycle currently
which would be expected to hit new peaks in September and October.
He pegged the palm oil prices to be trading between RM2,900 to RM3,300.
surveyor SGS released the palm oil export figures for the full month of
August on Tuesday at 1,427,052 tonnes, a surge of 19.6 per cent from
the same period last month.
Most of the rise in exports was mainly
to India and China which showed an increase of 81 per cent and 43 per
cent respectively compared with the previous month.
Central Bank (ECB) unveiled a new bond-buying program named as Outright
Monetary Transactions (OMT) on Thursday to ease the eurozone debt
The announcement by the ECB immediately pressured the
Spain and Italian bond yield and triggered the global equities to surge
more than two per cent the same day.
The next focus would be on
the Federal Open Market Committee meeting which was scheduled on
September 12 to 13 on the possibility of any quantitative easing
programs to be announced given the disappointing US jobs data released
November contract was noted to face resistance at RM3,100 level and the
inability to rise further from that level especially to cross above the
EMA 200 line pressured the palm oil market to fall back forming a more
complex consolidation phase which may drag for another couple of weeks
before a clearer trend is noted.
The red line support will be closely monitored and more observation needed to see how the chart pattern developed from here.
Resistance would be pegged at RM3,193 and RM3,270 while support was set at RM2,895 and RM2,820.
Major fundamental news this coming week
monthly supply demand report on September 10, Malaysian export data for
September 1-10 by ITS and SGS on September 10 and USDA’s monthly
supply-demand report on September 12.