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Malaysian crude palm oil futures ended firmer on weekend buying helped by robust soya oil futures. However, a decline in exports is expected to cap the upside temporarily. Exports of Malaysian palm oil products for July 1-20 fell. Palm oil demand is expected to pick up ahead of festival season in China , India and the Muslim holy month of Ramadan. However, there is a threat of higher prices limiting demand.

CPO active month contract is not showing follow-through signs and the momentum has slowed down. This could lead to a corrective fall towards 2,400 Malaysian ringgit (MYR) a tonne before the rally resumes higher or could see a consolidation in the 2,450-75 MYR/tonne and 2,600 levels before we see prices rising higher. Fall below 2,300 MYR/tonne could cause doubts on this bullish outlook. Favoured view still expects a rise towards the psychological 3000 MYR/tonne as long as 2,300 MYR/tonne levels hold downside attempts. A new impulse began from 1,427 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 after the current impulse ends. RSI is in the overbought zone now and minor indications of negative divergence indicating bearishness to set in soon. The averages in MACD are still above the zero line in the indicator suggesting bullishness to be intact. Therefore look for palm oil futures to test the support levels and then rise higher again.

Supports are at MYR 2,475, 2,325 and 2,245. Resistances are at MYR 2,565, 2,625 and 2,745.

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

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