Malaysian palm oil futures on Bursa Malaysia Derivatives exchange ended higher boosted by rising soya oil prices ahead of industry data from No. 2 producer Malaysia next week. The Malaysian Palm Oil Board, industry regulator, will issue official data on palm oil output, stocks, imports and exports on Monday. Malaysian palm oil stocks are likely to have risen to near record levels in June as strong production and imports outpaced demand. Energy futures declined after US jobs growth ground to a near-halt in June. Weather concerns in the soyabean growing areas also underpinned prices.
CPO futures are moving perfectly in line with our expectations. As mentioned in the previous update, prices steadfastly bounced from 3,020-30 Malaysian ringgit (MYR) a tonne) for the third time in the last few weeks. We anticipated a reversal from the 3,000-3,025 MYR/tonne zone, which has the potential now to test 3,120 MYR/tonne in the near-term or even higher towards 3,185 MYR/tonne in the coming sessions. However, unexpected fall below 3030 MYR/tonne again could dampen this bullish view. And such a fall has the potential to test 2,975 MYR/tonne or even lower to 2,945 MYR/tonne. Only a rise and close above 3,145 MYR/tonne could revive bullish hopes for 3,200-3,250 MYR/tonne in the coming sessions.
We believe the impulse that began from 1,427 MYR/tonne, which hit 4,486 MYR/tonne ended and a prolonged corrective move has possibly ended at 1,335 MYR/tonne. In the big picture, a new impulse began from 1,335 MYR/tonne and the third wave with a projected objective of 3,900 MYR/tonne has been met. Unlike in the previous update, we counted the fall towards 3,133 MYR/tonne as an end of wave “A” now and not the wave “C” as anticipated earlier. A corrective wave “B” has met one potential target near 3,465 MYR/tonne. A wave “C” kind of a decline looks likely with potential to test even 2,600 MYR/tonne in the bigger picture. RSI is in neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are below the zero line of the indicator again indicating bearishness ahead.
Therefore, look for palm oil futures to test the support levels and then rebound.
Supports are at MYR 3,030, 2,975 and 2945. Resistances are at MYR 3,115, 3,145 and 3,200.
(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 firstname.lastname@example.org.)