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Malaysian palm oil futures ended sharply higher on Friday lifted by higher energy prices. Slow demand and rising production are capping any upside attempts so far. Data from cargo surveyors show exports for May fell about 6 per cent to below 1.25 million tonnes. Argentine farm groups called off their protests against soya export taxes which are expected to increase supplies of grains and oilseeds weighing on prices. Big purchases by India/China during July/August/September are expected to emerge on any major declines though due to the up coming festival season.

CPO active contract got well-supported at crucial support points and shows fresh vigour to break out of the broad trading range it has been moving in. Good support will be seen at 3540-48 Malaysian ringgit/tonne levels now. Resistance will again be seen at 3700 MYR/tonne. Volatility is expected to continue and feel the broad trading range between 3400-3700 MYR/tonne could continue. Only a daily close below 3300 MYR/tonne could indicate a weakening market ahead. And only a daily close above 3750 MYR/tonne could revive bullish expectations for a test of 4000 MYR/tonne levels now. 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 resistance levels.

Supports are at MYR 354, 3454 and 3370. Resistances are at MYR 3645, 3730 and 3825.

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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