The Hindu Business Line : Palm oil may test support levels

Malaysian palm oil futures ended lower on Friday, as dismal export figures from cargo surveyors and prospects of higher output dampened sentiment. Dismal export data from cargo surveyors heightened fears of a slowdown in demand amid worries of a cut in Indonesian export taxes, which was announced later Friday. Exports of Malaysian palm oil products for April 1-25 rose 3 per cent to 1,068,400 tonnes from 1,037,210 tonnes shipped between March 1 and 25, cargo surveyor Societ e General de Surveillance said on Friday. Sluggishness in demand, higher production and energy prices cooling off from their recent highs are expected to pressure prices going forward.

CPO active contract has been stuck in a broad trading range now and showing some bearish tendencies in the short-term. Important support is at 3375 Malaysian ringgit/tonne levels now. Failure to hold support here could take prices even lower towards 3275 or even lower to 3210 MYR/tonne levels now. As mentioned in the previous update, despite the break of 3650 MYR/tonne, we still remain a bit apprehensive of any major bullishness to set in into the edible complex immediately. The grains complex--wheat, has technically shown clear bearishness now and the energy complex is also vulnerable for a good profit-taking after its recent run up. We can expect a sideways move in CPO futures. The wave counts need a complete re look, as the present move has altered most of the big picture counts we have been tracking so far. A new impulse began from 1427 MYR/tonne and this could be the third wave which has not ended so far. We can expect a corrective fourth wave in the form of A-B-C to have begun now. 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 now.

Supports are at MYR 3375, 3278 and 3210. Resistances are at MYR 3495, 3500 and 3650.

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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