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Price of crude oil (Light sweet crude) in NYMEX has risen 10% since last month to US$97.80 a barrel. On 16th of November, the price went briefly above the US$100 mark. The US dollar index has risen 4% since early November causing the Malaysian ringgit to weaken. The Malaysian Ringgit s currently at RM3.16 to a US dollar as compared to RM3.07 end of October. Price of soybean, however has declined in the past one month. Price of soybean futures in CBOT fell 6.4% in a month to US$1,171.50 per bushel and this narrowed the spread between crude palm oil and soybean prices further. Year-to-date, price of crude palm oil has declined 16% while soybean declined 15% as compared to a difference of 14% a month ago.
Malaysia palm oil exports rose 19% in October to 1.91 metric tons as compared to the previous month, according to the Malaysian Palm Oil Board (MPOB). MPOB data also showed that supply of palm oil increased 2.1% on-month to 1.84 million tons while palm oil stocks fell 1.6% to 2.1 million tons at end of October. Exports are expected to continue to increase in December and supply is expected to be slower because of the unusually wet weather. In a latest export estimate, cargo surveyor SGS (Malaysia) Bhd estimates exports for November 1-15 period to increase 11.6% from the same period in October at 802,c917 metric tons. Another surveyor Intertek Agri Services Sdn Bhd estimated a 10.5% increase to 801,463 metric tons.
Price of FCPO reversed strongly last month once it broke above the RM3,050 resistance level and above the short to long term 30 to 90 day moving averages. All the moving averages have starts to increase and this indicates a major uptrend reversal. The price finally broke above the Ichimoku Cloud indicator after staying below it for 8 months. The Cloud started to change direction upwards and its width expanding and this indicates a good momentum in the current up trend. The ADX indicator has also changed its indication from weak down trend to strong up trend in the past one month.
After struggling to break and stay above the middle levels since March, the momentum indicators strongly broke above the middle levels and managed to achieve highs not seen in 9 months. The MACD indicator, which went above its slow-MACD a month ago, continues to increase. RSI and Momentum indicators also show strong upward momentum. The Bollinger Bands expanded in late October and is still expanding. FCPO price currently trades near the top band of the Bollinger Bands. All these momentum indicator indicate a strong upward momentum with no signs of it weakening at the moment.
The trend may continue and price is expected to increase further with the current momentum. A few months ago, I have mentioned in my article that once the price pulls back to RM2,800, then it may start to rally to a RM3,400 target level in the next 6 months. Now, I am expecting it to be achieved with the next 3 months. However, we may expect slight pullback to around RM3,180 to RM3,200 because price is being overbought in the short term. The price remains bullish as long as it stays above RM3,100.
