Fundamental
Malaysian palm oil futures extended its losses on Friday pressured by the
overnight weakness in rival oil market performance. Globally, the West Texas
Intermediate (WTI) crude oil dropped $3.09 to settle at $53.50 per barrel on Friday
on the potential faltering crude demand amid the announcement made by US
President Donald Trump to impose tariffs on Mexico as a sign for that country to
stop its people from illegally crossing into US. According to US Energy
Department, Mexico is a key US trade partner as US exports more fuels to Mexico
than any other country. Meanwhile, the overnight CBOT soy oil futures slipped
0.19 cents to end at 27.59 cents per pound on signs of declining US soybeans
demand due to US intention to impose tariffs on Mexico which is the second
biggest buyer of US soybeans. Hence, expect palm prices to open lower and trade
in range bound today on the back of overnight slump in competing oil market.
Technical
Palm oil futures for August contract were initially traded in a sideways movement
on Friday before it traded lower in the evening session due to lack of buying
interest in palm oil market. Futures closed at 2,069 ringgit per tonne with losses of
15 points. Trading activities for the day can be depicted through the formation of
black bodied candlestick with long upper shadows which showed the bears
conquered the session. Technical wise, both MACD and RSI indicators continued
to show a neutral signal. Hence, expect palm prices to open lower today as selling
activities might persist due to negative sentiment on palm oil market. However,
futures are expected to trend range bound in the remaining session as trading is
seen to be quiet ahead of Hari Raya holidays on this coming Wednesday and
Thursday. As such, the support and resistance for today can be pegged at 2,050
and 2,080 respectively.
Strategy
Traders may short with a stop on or above 2,080.