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Malaysian palm oil futures rose to a new high on Friday, on suspected Chinese buying and a very strong soya oil complex. Prices were given extra impetus by news that 40 per cent of China’s planted rapeseed acreage was damaged by harsh winter weather, with the extra demand helping boost Malaysia’s palm oil exports by 53 per cent on the month in the first half of February. Exports of Malaysian palm oil products during February 1-15 surged 34.1 per cent to 619,065 tonnes as estimated by cargo surveyors SGS.

CPO active contract moved against our expectations. With strong cues from the soy complex, the bullish rally continues to extend further. As cautioned in the previous update, a direct rise above 3440 Malaysian ringgit (MYR) a tonne dented our bearish expectations taking prices beyond another important technical target at 3526 MYR/tonne. With no clear signs of any bearishness, there is now a possibility of this trend to extend further towards 3800 MYR/tonne, which is an ultimate target for CPO futures. 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 anytime now targeting 2895 levels or worst-case 2700 MYR/tonne. RSI is in the overbought zone indicating a 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 3410, 3345 and 3275. Resistances are at MYR 3554, 3670 and 3726.

Gnanasekaar .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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