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Malaysian palm oil futures ended sharply lower owing to weakening energy prices after hitting a record high in the early part of the week. Oil eased below $91 on Friday, after giving up all its gains in the previous session as a fire-damaged Canada-to-US oil pipeline could resume operation within days. Malaysian palm oil stockpiles are likely to rise 8 per cent in November as strong growth in production outpaced a small increase in exports. Exports of Malaysian palm oil pr oducts for November fell 2.8 per cent to 1,267,372 tonnes as per SGS a leading cargo surveyor.

CPO active February month contract corrected lower as expected. As mentioned in the previous update, a possible turnaround could be seen in the 3075-3125 zone. Supports are now at 2914-25 Malaysian ringgit (MYR) tonne levels followed by 2820 MYR/tonne. Break below 2890 MYR/tonne will confirm a fall lower towards 2700 MYR/tonne levels. As long as the long-term trend line point at 2700 MYR/tonne holds we believe this up trend should continue for a rise towards 3300 MYR/tonne levels eventually. A new impulse began from 1427 MYR/tonne as per the recent wave counts. We could still be in the fifth wave impulse and not an end as mentioned in the previous update. We can expect a corrective A-B-C to begin now targeting 2700 levels or worst-case 2400 MYR/tonne. RSI is in the overbought zone now indicating a possible correction in the offing. The averages in MACD are above the zero line in the indicator indicating bullishness to be intact. Therefore, look for palm oil futures to test the resistance levels and then correct lower subsequently.

Supports are at MYR 2915, 2890 and 2820. Resistances are at MYR 2978, 3005 and 3075.

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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