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Malaysian palm oil futures ended firm on Friday, supported by firm demand from India and China. Move by India to scrap import duties on crude vegetable oils on Monday provided respite for the battered markets. Crop agency Malaysian Palm Oil Board will unveil March production, stocks and exports of palm oil on Thursday. On-going rains in the Malaysian palm oil growing regions are expected to disrupt production, supportive for prices. Market’s attention however, is on the Argentine farmer’s strike in the coming week, which is hugely beneficial for palm.

CPO active contract tested our support levels as expected. Recovery from the lows look good, however, strong resistance will be seen at 3495-3510 Malaysian ringgit n(MYR) a tonne levels now. As mentioned in the previous update, failure to find support at 3375-80 MYR/tonne resulted in a further fall towards 3107 and 3041 MYR/tonne levels. Recover from the long-term support point at 3041 MYR/tonne looks good, but we need to observe the resistance in the 3500 MYR/tonne zone for further clues. We favour resistances in the 3500 MYR/tonne zone to now cap upside attempts and then fall lower again, and only a direct rise above 3650 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. 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 3230, 3107 and 3041. Resistances are at MYR 3475, 3580 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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