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Malaysian crude palm oil futures rose higher on Friday on concerns over supplies and expectations of a duty cut in palm oil by erstwhile major buyer India.

As expected by market participants, India on Friday cut the custom duty on palm oils, both crude and refined, by 10 percentage points to tame inflation. Exports have also been on the rise recently as seen in the estimates from the cargo surveyors. Exports of Malaysian palm oil products during April 1-10 rose 49.7 per cent to 431,121 tonnes from a month ago.

CPO active June contract continues to rise in line with our expectations. As mentioned in the previous update, the current move is seen bullish with potential to test 2295 Malaysian ringgit (MYR) tonne in this rally. Near-term resistance is at 2245-55 MYR/tonne levels. The indicators are still displaying highly overbought conditions warning a correction in the offing.

Support will now be seen at 2205 MYR/tonne followed by deeper support at 2165 MYR/tonne. As long as crucial support at 2044 MYR/tonne remains undisturbed, we can expect CPO futures to ultimately test 2475-2500 MYR/tonne levels being a trend channel resistance point as seen in the chart above.

A new impulse began from 1427 MYR/tonne as per the recent wave counts. We are in the beginning of the fifth wave move of that impulse. RSI is in the overbought zone indicating a possible correction lower. The averages in MACD are still above the zero line in the indicator suggesting bullishness to be intact.

Prices are above the short-term 8-day period EMA at 2152 MYR/tonne indicating bullishness and the 21-day period EMA is at 2085 MYR/tonne. Therefore, look for palm oil futures to test the resistance levels and then correct lower.

Supports are at MYR 2165, 2076 and 2045. Resistances are at MYR 2245, 2295 and 2322.

(The author is the Director of Commtrendz Research and also in the advisory panel of Multi Commodity Exchange of India Ltd (MCX). The views expressed in this column are his own and not that of MCX. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.)

Gnanasekar. T

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