How to trade Crude Palm Oil Futures ( FCPO ) 22 JULY 2016

#FCPO

Malaysian palm oil futures fell on Friday, after climbing to a two-week high in the prior session, although expectations of strong demand for the vegetable oil kept a floor under prices.

The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange closed down 1.5% to 2,317 ringgit (US$571.6) a tonne. On Thursday, it climbed to 2,368
ringgit, highest since July 5. Volumes stood at 32,734 by close.

"We are seeing some chart-related selling at current levels, as bargain hunting and short covering start to fade," said one Kuala Lumpur-based trader, adding though that export sales are expected to remain strong.

Exports of Malaysian palm oil products for July 1-20 rose 14% from a month earlier, data from cargo surveyor Intertek Testing Services showed, while Societe General de Surveillance reported export growth of 15.3%.  

The market is awaiting the next update on export demand from cargo surveyors due on Monday.  

"Bullish fundamentals and a weaker ringgit will cushion any attempt to sell," the Kuala Lumpur trader said.

This week, the ringgit has slipped almost 3%, its biggest such loss in 10 months, making palm oil cheaper for holders of other currencies.

Palm oil futures have risen 1.7% for the week — their second straight week of gains — with a drop in soybean prices failing to dent the bullish sentiment in palm oil.

"Palm is still the cheapest edible oil in the market," the trader said, adding that palm olein is being quoted US$80 a tonne below soybean oil in Argentina for August shipment.

While Chicago soybeans have lost 6% this week, soyoil is set to end the week down about half a percent.

Palm oil may drop to a support at 2,302 ringgit, as it failed to break a resistance at 2,374 ringgit, said a Reuters analyst for commodities and energy technicals.

The most actively-traded contract for palm olein on the Dalian Commodity Exchange gave up 3%, while Dalian soybean oil dropped 2%.