24/4/2018

FCPO Jul 18

Previous Close: 2406 -10

Malaysian palm oil futures declined on Monday evening, charting a second session of decline in three, as the market was pulled down by weaker demand and overnight losses in U.S. soyoil (The Star) Slowing palm oil exports in 2H April priced into the market, with steady crude oil and marginally weaker ringgit cushioning declines (Bloomberg)

According to Bloomberg, Indonesia sought to talk the European Union out of plans to restrict the use of palm oil in the bloc’s renewable fuels, arguing Monday it would jeopardize the nation’s fight against poverty. The next round of talks between the European institutions is scheduled for May 17. EU policy makers aim to reach an agreement on the draft law by the end of the first half of this year

Market trading on tight range yesterday, 3 consecutive reducing volatility suggesting market in sideway and awaiting further confirmation of production and export figure. AS US soyoil trading near 10 months low, sentiment favourable to sell side on FCPO today. Meanwhile, Dalian Palm Olein trading with -0.8%. Expecting FCPO to open low today.

FCPO spread remain neutral as cost of carry changes remain uncertain. SPPOMA data announced on yesterday shift May to Oct priced slightly higher than forward months. However, CPO forward curve have priced in rising production and remained in contango.

*Event to monitor*

1-20 Apr MPOA

1-25 Apr Export data on tomorrow

Announcement of potential export tax suspension

17 May EU policy agreement on the draft law to ban palm oil from the region’s biofuel mix.

*Wave & Fibo projection*

Major Impulsive Swing  : Bearish with target at 2311

Minor Swing       : Correction size between 2450 to 2414, price below this zone remain bearish while above 2450 indicate trend reversal.

Current Swing   : Correction size between 2403 to 2385

*Classic Support & Resistance*

Resistance:  2434 2450

Support:   2403, 2393

*Recommend Trading Plan for the day*

1. Market volatility reducing, trader please be cautious on trading using trend following system. Further entry signal will be update.

*FCPO Margin Requirement*

Intraday     MYR 2250

Overnight  MYR 4500

Spread       MYR 1000

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