Crude Palm Oil Weekly Report – July 20, 2014

by Jeremy Lim Kim Teck, Oriental Pacific Futures. Posted on July 19, 2014, Saturday

Malaysian palm oil futures ended the day’s low on Friday due to mild buying interest emerged after the price gapped lower once it opened.
Futures crude palm oil (FCPO) benchmark for October 2014 contracts settled at 2,308 which was down 38 points or 1.61 per cent from 2,346 last Friday.
Trading volume decreased to 186,437 contracts from 233,970 contracts totalled last week.
However, open interest based on Thursday increased to 218,692 contracts from 211,892 contracts last Thursday.
Intertek Testing Services (ITS) reported on last Tuesday an increase of 14.2 per cent for the first 15 days of July to 673,463 tonnes compared to May’s first 15 days at 589,748 tonnes.
Société Générale de Surveillance (SGS) also reported an increase of 11.42 per cent to 653,675 tonnes for the first 15 days of July compared to last month’s at 586,701 tonnes.
The increase in palm oil exports was contributed mainly by China, European Union and India which were 142,360 metric tonnes, 123,625 metric tonnes and 119,080 metric tonnes respectively.
However, the FCPO prices refused to go higher despite palm oil exports beating expectations.
The factors that weighed on the FCPO prices are weak soybean oil prices coupled with strengthening ringgit which had dampened the local market sentiments.
The FCPO prices rebounded slightly on Wednesday after ITS and SGS showed that Malaysia palm oil export rose 14.2 and 11.42 per cent respectively.
However, the gain was short-lived and this positive news failed to shore up the market sentiments.
Throughout the week, the lowest level it touched was 2,280.
Bearish outlook for soybean prices after the US Department of Agriculture (USDA) forecast ample global supplies of soybean in its monthly report issued on last Friday.
The FCPO price was also affected by this news as we know that the palm oil price typically follows the soybean oil price.
In addition, players in the palm oil market expect that palm oil output in Indonesia and Malaysia could slow down in July due to plantation workers taking leave for the Eid al-Fitr celebration.

Technical view  
Based on the daily chart, a reversal candle pattern has been detected on July 16, 2014.
Normally this type of candlestick pattern suggests that the FCPO prices may rebound from the current low level.
However, the Thursday and Friday’s candle were unable to confirm the previous reversal signs.
Hence, further information is needed to confirm the signal.
On the other hand, if the price closes below the previous lowest level at 2,287 in the coming trading days, the mentioned condition will be negated.
As we can see from the chart, the price briefly broke below the 2,287 level but later it managed to bounce back and closed near the intra-day highest level.
Since the price is able to close above the 2,287 level, it needs to break and close above the minor resistance level at 2,315 in the next trading sessions, then there is a high possibility it may cover the upside gap left on Monday (July 14, 2014).
Overall, the market action still remains negative until the trend is able to build up a higher low.
First resistance is seen at 2,350 if the price is able to close above 2,315, then followed by 2,395 level.
Meanwhile, first support level is seen at 2,260 then followed by 2,210-2,195 Key support levels are pegged at 2,260, and 2,210-2195, while key resistance levels are at 2,350 and 2,395-2,405.

Major fundamental news this coming week
ITS and SGS report on July 21, 2014 (Monday).

Oriental Pacific Futures (OPF) is a Trading Participant and Clearing Participant of Bursa Malaysia Derivatives. You may reach us at www.opf.com.my. Disclaimer:  This article is written for general information only. The writers, publishers and OPF will not be held liable for any damage or trading losses that result from the use of this article

Read more: http://www.theborneopost.com/2014/07/19/crude-palm-oil-weekly-report-july-20-2014/#ixzz386CQsSYt