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Malaysian palm oil futures on Bursa Malaysia Derivatives Exchange ended lower as disappointing export data stoked worries about global demand slowing for the vegetable oil. Cargo surveyor Intertek Testing Services reported that Malaysia's palm oil exports in March fell 3.1 per cent to 1.21 million tonnes from a month ago, hurt by weak demand from the world's top edible oil buyers China and India.
Another cargo surveyor Societe Generale de Surveillance showed that exports for the same period fell 3.4 per cent to 1.20 million tonnes shipped. A stronger Malaysian ringgit also curbed buying interest making it expensive for overseas buyers.
Crude palm oil active month June futures moved as expected. As mentioned in the earlier update, the potential downside targets are at 2,675-80 Malaysian ringgit (MYR) a tonne, followed by 2,620 MYR/t levels. Failure to hold at 2,640 MYR/t level signifies weakness. This 2,640-50 MYR/t is a long-term rising trend line support point. Strong support is seen in the 2,610-20 MYR/t zone being another important trend line support point. Favoured view expects prices to edge higher from the above mentioned supports. Failure to do so could push prices even lower to 2,575 MYR/t levels. Subsequently, prices could recover from there with several resistances on the way. Near-term resistance is at 2,725 MYR/t followed by 2,805 MYR/t levels.
As mentioned earlier, prices met an intermediate wave target at 2,135 MYR/t and corrective decline to 2,345-50 MYR/t levels, followed by a sharp third wave move to 2,575-2,600 MYR/t materialised. Price structures suggest a possible third wave move ending at 2,690 MYR/t and a corrective, fourth wave with targets at 2,450 MYR/t or even lower. The fifth wave possibly ended at 2,898 MYR/t and a corrective A-B-C in progress with an equality target at 2,615-20 MYR/t levels. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still above the zero line of the indicator hinting at bullishness to be intact. Only a crossover again below the zero line hint at bearishness.
Therefore, look for palm oil futures to test the support levels in the coming sessions.
Supports are at MYR 2,615, 2,595 and 2,575.Resistances are MYR 2,675, 2,725 and 2,805.
Gnanasekaar .T
(The author is the Director of Commtrendz Research and also in the advisory panel of Commodity exchanges and corporate houses. The views expressed in this column are his own. This analysis is based on the historical price movements and there is risk of loss in trading.)
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