Crude palm oil futures (FCPO) on Bursa Malaysia Derivatives fell sharply this week due to bearish US Department of Agriculture (USDA) reports and slower exports demand.
The benchmark FCPO June contract plunged RM115 or 4.61 per cent to settle at RM2,378 per tonne on Friday from RM2,493 per tonne last Friday. The trading range for the week was from RM2,376 to RM2,505.
Total volume traded for the week amounted to 157,806 contracts, down 36,607 contracts from the previous week. The open interest as at Thursday decreased to 164,064 contracts from 169,633 contracts the previous Thursday.
The palm oil prices were under selling pressure from the beginning of the week once the exports data were released by both the cargo surveyors were unfavourable.
The cargo surveyor Intertek Testing Services (ITS) released the palm oil export figures for the period of March 1 to 25 on Monday at 1,067,140 tonnes, a drop of 7.52 per cent while another surveyor SGS at 1,055,914 tonnes, a fall of 6.96 per cent from the same period last month.
China remained the top palm oil importer in March but the increase in demand from China was unable to offset the sharp fall in exports to other major palm oil importing countries like India, Pakistan and US.
In addition, the bearish reports released by the USDA on Thursday further dampened the market sentiment.
The Grain Stocks report showed that the US soybean stocks fell 27 per cent to 999 million bushels as at March 1, 2013, far above the range of most analysts’ estimates at 930 million to 950 million bushels.
Meanwhile, USDA forecast the soybean planted area for 2013/14 would be at 77.1 million acres, slightly lower than the previous year’s planted acreage.
The intended US soybean planting acreage was also lower than the market estimation at 78 million acres but would be the fourth highest on record if the figure above was realised.
The US grain markets reacted negatively to the USDA reports including corn and wheat prices. Soybean prices fell 3.4 per cent while corn plunged to the day limit during that day.
The Cyprus bank was reopened on Thursday and the withdrawal was limited to 300 euros per person. The situation seemed to be under control at the moment and no major issue arised during that day.
The Cyrus bailout would be monitored continuously to gauge the development of the Europe debt crisis in the coming months.
Technical view
The benchmark June contract briefly broke the previous week’s high and was unable to sustain the rally once the exports growth was not as robust as expected.
Palm oil prices only managed to cover partial of the gap left on February 25 and faced heavy selling pressure thereafter.
The recent palm oil price movement showed that the market remained in sideways but the crucial support at RM2,360 would be monitored closely.
Any price break below RM2,360 level would bring the prices down to test the low of RM2,217 level.
Resistance would be pegged at RM2,467 and RM2,580 while support was set at RM2,360 and RM2,217.
Major fundamental news this coming week
No major fundamental report released this coming week.
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.
Source : The Borneo Post
