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Malaysian palm oil futures on the Bursa Malaysia Derivatives ruled higher on Monday supported by recovery in crude oil prices. The official MPOB data on output and stocks came slightly higher-than-expected. Malaysia’s palm oil stocks at the end of October rose 3.7 per cent to 2,166,453 tonnes against a revised 2,090,001 tonnes at the end of September, industry regulator Malaysian Palm Oil Board said on Monday. Shipments of Malaysian palm oil products rose 0.2 per cent for November 1-10 compared with the same period a month ago, cargo surveyor SGS estimated.
Crude palm oil active month January futures are moving as per expectations. As mentioned in the previous update, expect prices to test MYR 2,405-15/tonne levels on the upside while supports levels hold. Despite the current sharp decline from the highs of 2,345/tonne and test of important supports, the big picture charts are yet to show a convincing reversal in trend. Therefore, we remain bullish in the short-term and expect resistance levels to be tested while remaining cautious about medium-term bullishness. Prices have taken support in the crucial MYR 2,180-95/tonne range being a trend line support zone. Resistances are at 2,275 followed by 2,300 levels on the upside. While prices hold support in the MYR 2,180-2,205/tonne range, they are expected to move up gradually. Only a fall below 2,160 could dash our bullish hopes.
As mentioned earlier, we are now more inclined to an impulsive move towards MYR 2,295-2,300 levels or even higher to 2,410. This could either be a corrective move within a larger downtrend. A rise above 2,600 could revive hopes of a new impulse, which can carry prices much higher towards MYR 2,900/tonne. However, we still look at the present move to be a corrective one within a larger downtrend.
RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are above the zero line of the indicator hinting at a bullish reversal. Only a crossover again below the zero line could hint at resumption in the bearish trend.
Therefore, look for palm oil futures to test the supports and then rise again.
Supports are at MYR 2,210, 2,180 and 2,160. Resistances are at MYR 2,275, 2,305 and 2,350.
The writer is the Director of Commtrendz Research and there is risk of loss in trading.
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