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Malaysian crude palm oil futures ended lower on Friday on a lacklustre day with increasing supplies keeping a lid on prices. Markets are awaiting fresh leads from MPOB, on production and supply and updates on exports from cargo surveyors next week. Palm oil prices are expected to be underpinned by expectations of better exports in the coming months, ahead of festival season in China, India and the Muslim holy month of Ramadan.

CPO active month contract is stuck in a range now displaying some bearish tendencies. Though the rebound last week was impressive, follow-through from there has been negligible, which indicates another corrective fall to take place before we eventually test the recent highs at 2700 MYR/tonne or even higher. Only a fall below 2300 MYR/tonne could cause doubts on this bullish outlook. Favored view still expects a rise towards the psychological 3000 MYR/tonne as long as 2300 MYR/tonne levels holds downside attempts. Supports will now be seen at 2525 MYR/tonne followed by 2450 MYR/tonne. 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 after the current impulse ends. RSI is in the neutral zone indicating that it is neither overbought nor oversold and has started showing signs of minor negative divergence indicating bearishness to set in soon and caution against aggressive longs. 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 2525, 2450 and 2325. Resistances are at MYR 2625, 2745 and 2810.

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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