Daily

Global Palm Price Outlook and Strategy

Decision enabling market analysis & price outlook

Report for the day: 27-03-2020

Global Palm Price Outlook Summary

26-Mar- Markets will be looking at upcoming figures from other cargo surveyors and MPOA for trend estimates to be released through the week; however, prevailing volatility in
2020 the commodity markets would mean palm oil futures could also stay partly or mostly decoupled with underlying long term fundamentals.

APEX Palm Oil Jun’20

BMD CPO Jun’20 Future MYR/MT ID CPO USD/Ton ID CPO KPBN IDR/Kg
Futures USD/MT

Last
2357 562* (as on 25th Mar’20) 8191 552.25
Close

Change -26.00 NA +191 -6.25

Price Likely to consolidate in the zone of Likely to find support near USD 520 on any Likely to hold above support of IDR 7800, and Likely to consolidate in the
Direction MYR 2400 to MYR 2300 in coming 3-5 further weakness and consolidate within USD consolidate with upside potential of IDR 8250 zone of USD 530 to USD 590
& Range days. 570 in the coming 3 to 4 weeks. in coming 3 to 4 weeks. in coming 3-5 days.

MY RBD Palm Olein 1M Forward

MY Palm Stearin USD/MT MY PFAD USD/MT USDMYR Spot
USD/MT

Last
581.50 570.00 565.00 4.33
Close

Change 1.00 -30.00 -5.00 -0.057

Price Likely to hold above support of USD Likely to hold above support of USD 530 and
Likely to hold above USD 550 and correct
Direction 550 and trade higher towards USD trade higher towards USD 590 in the coming
towards USD 610/630 in coming 3-4 weeks.
& Range 610/630 in coming 3-4 weeks. 3 to 4 weeks.

Trading Strategy
27-Mar-2020 Market Contract Position Entry Entry Date Objective Stop Loss

Jun’20 Sell 2380 — 2300 2430

Fresh / Open Position BMD CPO 3M FUTURES, MYR/MT

Strategy Review The short position of MYR 2395 was liquidated at 2350 on 26th Mar’20. For fresh position traders may consider above mentioned strategy.

Market News Global Palm 26-Mar-2020

The benchmark palm oil contract FCPOc3 for June delivery on the Bursa Malaysia Derivatives Exchange ended 24 ringgit lower, or 1.01%, to 2,359 ringgit ($544.80) per tonne

SGS Malaysia 1-25 march exports down 13.6% at 838793 Ton vs 1-25 Feb exports of 970764 Tons. Exports fell on 24% drop in PalmOlein exports.

Malaysia’s March 1 – 25 palm oil exports fall 13.6 pct to 838,793 tonnes from 970,764 tonnes shipped during February 1 – 25 as per cargo surveyor Intertek Testing Services.

Malaysia’s March 1-25 palm oil exports fall 11.7% to 866,270 tons from 981,073 tons shipped during Feb 1-25 according to AmSpec Malaysia.

All oil palm plantations and mills in Sarawak are required to submit a list of their workers to the state disaster management committee, as part of efforts to curb the spread of Covid-19. The
list should be submitted in the next one to two days to the divisional-level committee where the plantations or mills are located want to know the number of foreign workers in the
respective plantations and mills as nearly 70% of the positive cases are imported cases. In Sarawak, there are no positive cases in plantations yet.

Oil palm plantations and mills could continue to operate, if they complied with the standard operating procedures set out by the government such as temperature checks, social distancing
and no large gatherings at workers’ quarters.

Malaysian government acknowledges that India and Malaysia need to discuss further on several issues, including curbs on palm oil exports to India and the trade imbalance in favor of
Malaysia. Malaysian Prime Minister is also prepared to meet India’s Prime Minister to discuss bilateral trade. Malaysia’s relationship with its biggest customer India is expected to improve
after India lifted a 5% import duty on the edible oil.

Denting sentiment further was a firmer ringgit MYR up 1.3% against the dollar. Gains in the ringgit, palm’s currency of trade, make the edible oil more expensive for holders of foreign
currency.

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Daily Global Palm Price Outlook and Strategy
Decision enabling market analysis & price outlook

Comprehensive Standard Operation Procedures (SOP) that strictly adheres to the guidelines set by the Health Ministry have been prepared by Malaysian Palm Oil Board which calls for
local palm plantation companies to place strict measure on all their operations, particularly on harvesting and millings. While this might call for some short term adjustments, it is to be
taken on a positive note from a long term perspective.

Palm oil industry players have been told to bring along a copy of Malaysian Palm Oil Board’s (MPOB) permission letter when undertaking the transactions and movements of palm oil
products during the movement control order (MCO) period. The permission letter can be downloaded via the MPOB website. The letter should be presented to the authorities as a permit
to carry out the operations of buying, selling, and moving of palm oil products .Parties involved in such transactions are also required to present copies of MPOB licences or any related
documents for the movements of palm oil products, such as the handover of oil palm fruits by smallholders.

The MPOB would also like to advise the industry to comply with the regulations for transactions and movements of palm oil products under the movement control order and all instructions
of the National Security Council.

Plantation operations are expected to be affected by lower exports and prices in the coming months given disruption in the global palm oil supply chain led by the Covid-19 pandemic.

Indonesia, the world’s top palm oil producer, exported 2.39 million tonnes of palm oil in January, including refined products, Indonesia Palm Oil Association (GAPKI) data showed on
Thursday .Shipments fell from 3.25 million tonnes in the same month last year and 3.72 million tonnes in December. January’s export drop was due to high stock level in main importing
countries. Meanwhile, uncertainties surrounding spread of coronavirus and global energy price are seen to have impacted demand for the vegetable oil, GAPKI said in a statement.
Meanwhile, by the end of January, Indonesia’s palm oil stock stood at 4.54 million tonnes.

Supply and Demand Analysis Global Palm 27-March-2020

SGS data show exports are down 13% at 838793 Ton for Mat 1-25 vs 1-25 Feb exports of 970764 Tons. Exports fell on 24% drop in PalmOlein exports. The latest ITS and AmSpec
Malaysia exports data for the period Mar 1-25 are show below.

The shutting down of plantations in Sabah region is going to cause some supply concerns and other plantation companies can also take similar decisions. If there is a complete lock down
then this is going to have a very big impact on the market as Malaysia is the second largest palm oil producer in the world

Palm oil demand for food and processing in China, and biodiesel in the EU, is slowing down due to the lock down as per MPOB and we can expect the similar demand to continue to
across the world mainly in India which is in Lock down right now.

But these strict implications are expected to curb the spread of Covid-19 and hence a sooner recovery. Hence,for the second half of this year, the supply–demand imbalance is expected
to present a brighter outlook as China is now recovering from the outbreak, India is expected to follow the same track and palm oil producing countries are facing tight supply.

The plam oil imports from EU also have seen a decline of 14% Year on Year. The palm oil imports for 2019/20 till March 22 stood at 4.02 million tons vs 4.7 million tons during the same
period last year.

Indonesia exports as per GAPKI are down 32% Y-o-Y in the month of Jan. We expect this to continue into Feb and March too due to the current lock down in India, EU. And we also expect
imports to be slower from China too considering the Covid-19 situation in Indonesia.

We have seen some rise in imports from middle east Y-0-Y during the months of Jan and February by 49% from 0.34 MMT to 0.51 MMT. owing to Ramadan demand.We have also
observed that the imports during the three months from December till February(DJF) were also up 59% Y-o-Y from 0.51 MMT to 0.81 MMT. From the past three years the rise in imports is
observed during the first 4 months prior to Ramadan months and sometimes continuing into the first Ramadan month( in case Ramadan is spread across two months).

The global economic situation is worsening day by day. This could lead to a slow down in all sectors,the impact of which is going to extend until the end of year. This will also impact the
crude oil prices and hence all the related markets. The situation is turning much worse earlier than expected. This would also mean that the bio-diesel production is going to be much
difficult in a situation like this.

Technical Outlook BMD CPO 3M FUTURES, MYR/MT 27-Mar-2020

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 Daily Global Palm Price Outlook and Strategy
Decision enabling market analysis & price outlook

BMD CPO Jun’20 Futures prices traded in a tight range and settled at MYR 2357 down by MYR 26.00 forming ”harami” candlestick pattern.

Trend analysis:-

Prices have tested the upper boundary of the falling trend line in the last session after consolidating within MYR 2200 to MYR 2300 for two weeks.

The bearish trend started since the start of the year after placing top at MYR 3150, was observed that every corrective rise has failed to sustain above 50% Fibonacci Retracement level,

Prices have tested the 50% Retracement level to the minor swing from 2586 to 2190, the current consolidation is likely to find downward pressure in coming days.

Momentum indicators analysis :-

The Stochastic (14/3/3) is seen turning lower from over bought region in intra-day charts (4Hr) while prices are at resistance suggesting correction in coming days.

At the same time momentum oscillators are seen depicting initial signs of positive divergence in daily charts and any breakout above MYR 2420 need to be watched carefully.

Volume & OI analysis:-

Open interest is seen dropping in the last few trading days while prices are recovering from support suggesting a short covering lead rise.

while its quite common for volume to dry up in consolidation, drop in OI wont add any significant change to bearish bias.

Support & Resistance for the trend:-

On the upside, immediate resistance is located at MYR 2400 which happens to be the upper boundary of the falling channel followed by MYR 2585.

On the lower side MYR 2320/2300 acts as immediate support followed by MYR 2200.

Going ahead prices are likely to consolidate in the zone MYR 2400 to MYR 2300 in coming 2-3 days.

Turnaround level:-

A conclusive move above the resistance of MYR 2400/2430 at the immediate front would negate the subsequent weakness in prices and shift in bias to positive there by opening the
chances of testing MYR 2585 or higher.

while breaching below 2300 would extend the fall towards MYR 2200.

Concisely, BMD CPO 3M Futures prices are likely to consolidate in the zone MYR 2400 to MYR 2300 in coming 2-3 days.

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 Daily Global Palm Price Outlook and Strategy
Decision enabling market analysis & price outlook

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