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Malaysian crude palm oil futures ended higher in quiet trade on Thursday, helped by a rally in the soya complex. The market was also eagerly awaiting an announcement from the Indonesian Government on the Export Tax on Thursday. On Saturday, it announced that export tax on crude palm oil was set a 10 per cent if prices rise above $850 a tonne from September 3. Rise in the energy futures is also seen supporting CPO futures. The crude oil market often lends support to vegetab le oils, including palm and soyabean, because of their growing use in making bio-diesel, which competes with petroleum diesel.

CPO active month contract is consolidation in a narrow range showing some bullish signs once again. Direct rise above 2465 Malaysian ringgit (MYR) a tonne will open the way for a rise towards 2550-60 MYR/tonne levels, where it is expected to find strong resistance. Only a daily close above 2550 MYR/tonne could rekindle bullish hopes again. Favoured view expects supports to hold for a rise towards 2550 MYR/tonne in the coming week as long as 235 MYR/tonne holds declines. 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. Negative divergences seen in the indicator resulted in a corrective fall as mentioned in the previous update. The averages in MACD are below the zero line in the indicator bearishness to be intact. Therefore look for palm oil futures to test the resistance levels.

Supports are at 2365, 2325 and 2285 ringgits. Resistances are at 2478, 2550 and 2595 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 price movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.)

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