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Malaysian palm oil futures ended marginally higher on Friday, trading in a narrow range waiting for leads from the energy complex. Energy markets have a growing influence on palm oil and soya oil prices because of the use of edible oils to produce bio-fuels, which compete with petroleum diesel. Cargo Surveyors Intertek Testing Services will unveil its export data over the weekend while Societe Generale de Surveillance will announce its estimates on Monday. Expectations of strong export data from cargo surveyors next week kept the market on the upside along with wet weather worries in major palm producing areas. CPO active February month contract pulled back higher, but the move has been unconvincing and therefore believes it to be a corrective one in nature and not a reversal. Resistance should now be seen at 2935-40 Malaysian ringgit/tonne levels. We expect prices to ease back lower towards 2800 MYR/tonne levels or even lower. 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 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 2935, 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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