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Malaysian palm oil futures ended slightly higher on Friday, rebounding from the previous day’s five-week lows as crude and soya oil markets bounced on the strength of equity markets. Fears of rising supply and a slowdown in exports due to high prices have mounted again, cutting into gains past six months. Market awaited reports from cargo surveyors Societe Generale de Surveillance and Intertek Testing Services on exports for the first 10 days of December on Monday. C rude oil’s ability to hold on above $ 90 will be a crucial factor for palm oil futures going forward.

CPO active February month contract corrected fell lower in line with our expectations. As mentioned in the previous update, a possible turnaround could be seen in the MYR (Malaysian ringgit) 3,075-3,125 zone. Minor signs of a bullish reversal are in place. Fall below 2835 MYR/tonne will nullify this expectation taking prices further lower towards 2778 MYR/tonne. Resistance should now be seen at 2915-20 MYR levels. However, in the bigger picture, 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 MYR levels or worst-case 2400 MYR/tonne. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. 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 support levels and then rise higher subsequently.

Supports are at MYR 2835, 2778 and 2700. Resistances are at MYR 2915, 2965 and 3005.

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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