Malaysian palm oil futures slid for the third consecutive weeks, tracking weakness from related edible oils from Dalian Commodity Exchange and Chicago Board of Trade (CBOT), and weighed down by strengthening of ringgit.
The benchmark crude palm oil futures (FCPO) contract plunged 3.75 per cent to RM2,694 on Friday, which was RM105 lower than RM2,799 recorded during the previous week.
The average daily trading volume during Monday to Thursday increased slightly, up 11.97 per cent with a total of 195,489 contracts traded, as compared with 174,598 contracts traded during last Monday to Thursday.
Daily open interest during Monday to Thursday increased 3.08 per cent to 256,018 contracts from 248,365 contracts during last Monday to Thursday.
Intertek Testing Services (ITS) reported that exports of Malaysian palm oil products for November 1 to 15 fell 4.3 per cent to 660,465 tonnes, from 690,074 tonnes shipped during October 1 to 15.
SocieteGenerale de Surveillance (SGS) reported that exports of Malaysian palm oil products during November 1 to 15 fell 8.2 per cent to 650,962 tonnes from 709,322 tonnes shipped during October 1 to 15.
Appetite for palm oil usually slows towards the end of the year in markets with winter seasons such as China and Europe, as the tropical oil solidifies in cold temperatures.
Palm oil production is seen seasonally falling towards the year-end after a likely peak in October, the current rains could contribute to better-than-expected productivity.
Malaysian palm oil production rose over 12 per cent in October versus the previous month, on the back of a higher number of working days and in line with the seasonal trend.
Spot ringgit appreciated 0.64 per cent to 4.1640 against the US dollar this week, compared to 4.1910 on last Friday.
Special Counsel Robert Mueller’s team issued the subpoena last month for documents containing specified Russian keywords from more than a dozen officials, according to the report in the Wall Street Journal.
The report overshadowed any support for the dollar from the approval of a tax-reform bill in the US House of Representatives on Thursday, which had been a key focus for markets.
Technical analysis
According to the FCPO daily chart, the market successfully broke out from the consolidation phase and broke through the psychological level 2,700 to touch the three-week low at 2,694.
On Monday, Malaysian palm oil was down to the three-week low, with the benchmark contract closing at 2,760.
On Tuesday, Malaysian palm oil gapped-down and closed lower, with the benchmark contract closing at 2,718.
On Wednesday, Malaysian palm oil extended its losses to a four-week low, with the benchmark contract closing at 2,712.
On Thursday, Malaysian palm oil closed higher, with the benchmark contract closing at 2,739.
On Friday, Malaysian palm oil pared earlier losses during the second-half session, with the benchmark contract closing at 2,799.
In the coming week, the market is seen to rebound slightly from the week-low before continuing to trade lower as the market was trading on the lower Bollinger Band.
Resistance lines will be positioned at 2,850 and 2,800, whereas support lines will be positioned at 2,650 and 2,600. These levels will be observed in the coming week.
Major fundamental news this coming week
ITS and SGS reports will be released on November 20.
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.