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Malaysian palm oil futures on BMD ended higher Friday, hitting a two-week high before ending little changed on Friday on thin volumes ahead of year-end holidays. Palm oil production in Malaysia might be hampered as a second wave of flood may hit the palm producing areas in Malaysia. The demand side continues to be benign. Exports of palm oil products for Dec. 1-25 fell 7.6 percent to 1,137,374 tonnes from 1,230,878 tonnes shipped during Nov. 1-25, cargo surveyor Societe Generale de Surveillance said.
CPO active month futures pulled back higher as expected. Prices have gone above resistance levels in fairly thin volumes. However, price structures warn of a possible upside move in the short-term towards 2750-75 MYR/ton, while supports at 2585 MYR/ton holds. The trigger for such a move could be a direct rise and close above 2658 MYR/ton. Such a move could hint that the corrective decline has ended prematurely and further upside to levels mentioned above or even higher to 2800-25 MYR/ton levels can be seen subsequently. Only a fall below 2545 MYR/ton could dash our bullish hopes.
As mentioned earlier prices met an intermediate wave target at 2135 MYR/ton and corrective decline to 2345-50 MYR/ton levels, followed by a sharp third wave move to 2575-2600 MYR/ton materialised. The potential third wave targets are near 2750-2800 MYR/ton levels now. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The negative divergence identified earlier has worked and strong corrective fall was seen. The averages in MACD are still above the zero line of the indicator hinting at bullishness to be intact. Only a crossover below the zero line again could again hint at weakness again.
Therefore, look for palm oil futures to test the resistances.
Supports are at MYR, 2620, 2585, 2545 Resistances are at MYR 2595, 2665 & 2725.
(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.t@gmail.com .)
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