The Hindu Business Line : Palm oil may test support, rise

Malaysian palm oil futures ended little changed on Friday, with weak soyabean oil prices pressuring prices down even as palm oil import duty cuts in India and Bangladesh pushed them up. The possibility that China will purchase more palm oil to cover requirements after cancelling some costlier soya oil purchase deals also supported CPO futures. Reports that Indonesia may raise the export tax on palm oil are also supportive of Malaysian prices. Cargo surveyor, SGS (Malaysia) Bhd, estimated exports during the period March 1-10, at 824,563 tonnes, up 8.9 per cent on month coming on the lower side of market expectations.

CPO active contract fell sharply lower in line with our expectations. There are no clear sign of any upturn so far and rallies to 3450-75 Malaysian ringgit (MYR) tonne are expected to cap the upside. There is al possibility of the gap being filled at 3510 MYR/tonne. Important support levels going forward are at 3107 and 3041 MYR/tonne. We favour resistances in the 3500 MYR/tonne zone to now offer good resistance to fall lower again, and only a direct rise above 3574 MYR/tonne will cause doubts about this bearish view. 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 targeting 3041 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 rise higher subsequently.

Supports are at MYR 3230, 3107 and 3231. Resistances are at MYR 3450, 3574 and 3670.

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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