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Malaysian crude palm oil futures surged higher on Friday boosted by strong exports and higher soya oil futures. Malaysia's exports have started picking up after months of slowdown because of demand from the world's top importers, China and India.

Exports of Malaysian palm oil products during April 1-25 rose 27 per cent to 907,330 tonnes from 714,124 tonnes shipped between March 1 and 25. Cargo surveyors will announce April exports numbers on Monday. However, a stronger ringgit coupled with high palm oil prices is expected to pressure prices.

CPO active July contract tested the support levels and bounced higher from there. Immediate resistance will be noticed at 2245 Malaysian ringgit (MYR) a tonne levels and as long as this level caps advances, our favoured view is to expect a corrective fall towards 2122 MYR/tonne or even lower towards 2044 MYR/tonne levels. Indicators are still displaying highly overbought conditions warns of a deep correction in the offing.

Important resistance is at 2245-50 MYR/tonne levels. Daily close above 2250 MYR/tonne can open the way for a rise to 2352 MYR/tonne. 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 below the short-term 8-day period EMA at 2174 MYR/tonne indicating short-term bearishness and the 21-day period EMA is at 2141 MYR/tonne. Therefore, look for palm oil futures to test the resistance levels and correct lower.

Supports are at MYR 2153, 2076 and 2045. Resistances are at MYR 2245, 2295 and 2322.

(The author is the director of Commtrendz Research and 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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