Malaysian palm oil futures climbed higher on Friday to 2,249, due to expectation of  the monsoon rain which could damage output for the rest of the year.

Futures Crude Palm Oil (FCPO) benchmark March 2015 contract settled at 2,249, up 96 points or 4.5 per cent from 2,153 last Friday.

Trading volume decreased to 122,176 contracts from 145,820 contracts from last Monday to Wednesday.

Open interest decreased to 539,920 contracts from 547,002 contracts from last Monday to Wednesday.

Cargo surveyor, Intertek Testing Services (ITS) reported that exports of Malaysia’s palm oil products during December 1 to 20 increased 8.8 per cent to 911,595 tonnes compared with 837,659 tonnes during November 1 to 20.

In a separate report, ITS said that exports of Malaysian palm oil products during December 1 to 25 decreased 2.3 per cent to 1.077 million tonnes compared with 1.103 million tonnes during November 1 to 25.

Another cargo surveyor, Societe Generale de Surveillance (SGS), reported that Malaysia’s palm oil exports during December 1 to 20 increased 7.5 per cent to 906,594 tonnes compared with 843,707 tonnes during November 1 to 20.

SGS reported in a separate note that Malaysia’s palm oil exports during December 1 to 25 decreased 1.4 per cent to 1.083 million tonnes compared with 1.099 million tonnes during November 1 to 25.

Overall, demand from increased from the EU, the US and India, while demand fell from China.

Spot ringgit strengthened on Friday to 3.489, due to being supported by selling interest in the Singapore dollar.

At the start of the week, the price rose, due to better than predicted export data coupled with recovering crude oil prices and regional equity markets.

The price continued to climb, due to increased expectations that the monsoon season will harm supplies while demand continued to rise.

The price continued to increase due to monsoon rains reducing expected output level.

By the end of the week, the price initially fell, due to a strengthening ringgit coupled with India’s tax increase on edible oil imports rose.

However, losses were recuperated, by the later session, and price rose, due to expectation of heavy rains interrupting harvesting.

Technical analysis

According to weekly FCPO chart, the price broke middle Bollinger band.

The price has the potential to range between 2,150 and 2,350, over the coming weeks into the start of next year.

According to the daily FCPO chart, the price rose, closing above the middle Bollinger band.

The price continued to rise, closing above psychological level 2,200, while closing below the resistance line 2,210.

The price continued to climb, breaking and closing below the resistance line 2,210 and top Bollinger band.

The price then initially fell, testing psychological level 2,200.

However by the afternoon session the price rose, recovering losses, closing above top Bollinger band, while closing below resistance line 2,250.

In the coming next, the price has the potential to range between 2,150 and 2,250.

Resistance lines will be placed at 2,290 and 2,350, while support lines will be positioned at 2,210 and 2,150, these will be observed next week.

Major fundamental news this coming week

ITS and SGS report on December 31 (Wednesday). New Years Day on January 1 (Thursday)

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