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Malaysian crude palm oil futures ended sharply higher due to weekend short covering amid rising soya oil futures. Soya oil has been underpinned by weather conditions in producing countries, which has rubbed off on CPO futures. Markets will be looking forward to data from the official Malaysian Palm oil board on output, stocks and export figures. Both the cargo surveyors will also provide estimates of July 1-10.

CPO active month contract is moving perfectly in line with our expectations. As seen in the chart, the fibonnaci retracement level held well at 2235-40 Malaysian ringgit/tonne and prices have not gone below this level, which is a bullish sign. A daily close above 2550 MYR/tonne will once again rekindle bullish expectations for a retest of the recent highs or even higher. There is possibility of prices stay in the 2550-2300 MYR/tonne range before we see a breakout higher above 2600 MYR/tonne. In any case, we favor a bullish market ahead for CPO futures as long as 2245-50 remains undisturbed. A new impulse began from 1427 MYR/tonne as per the recent wave counts. We are in the fifth wave move of that impulse. We can expect a corrective A-B-C to begin now. RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages in MACD are still above the zero line in the indicator suggesting bullishness to be intact. The short-term 8 period EMA and 21 period EMA is at 2465 MYR/tonne and 2378 MYR/tonne respectively indicating bullishness. Therefore look for palm oil futures to consolidate and rise higher.

Supports are at 2450, 2375 and 2245 ringgits. Resistances are at 2525, 2600 and 2655 ringgits.

Gnanasekar. T

(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 p rice movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.)

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