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Malaysian palm oil futures on Bursa Malaysia Derivatives ended higher on Monday, after data from industry regulator Malaysia Palm Oil Board showed palm oil stockpiles fell by 2.6 per cent month-on-month in January-end to 1.93 million tonnes (mt). A weaker ringgit against the dollar also aided the uptrend.
Palm oil output in Malaysia reached 1.51 mt in January, a decline of 9.6 per cent from the previous month, data from the Malaysian Palm Oil Board showed on Monday.
Markets also cheered the higher export numbers by cargo surveyors Intertek and SGS, which said February 1-10 shipments posted a monthly gain of 4.1 per cent and 8.4 per cent, respectively.
Crude palm oil active month futures are moving in line with our expectations.
As mentioned in the previous update, our favoured view expected supports to hold on the downside and prices to revisit and cross 2,600 Malaysian ringgit a tonne (MYR/t) levels.
Supports were seen near 2,530-25 MYr/t being a rising trendline support point. Strong resistance is seen at 2,635-45 MYR/t levels now. This level happens to be a trend line resistance point.
A daily close above 2,652 MYR/t could once again open the upside targeting 2,750-60 or even higher. Supports are noted in the MYR 2,585-95 zone followed by MYR 2,570 levels.
Break below MYR 2,530/tonne is needed to dent our bullish expectations. Favoured view expects supports to hold and prices to test resistance mentioned above.
As mentioned earlier prices met an intermediate wave target at MYR 2,135 and corrective decline to MYR 2,345-50 levels, followed by a sharp third wave move to 2,575-2,600 materialised.
Price structures suggest a possible third wave move ending at MYR 2,690/tonne and a corrective, fourth wave with targets at MYR 2,450 or even lower.
RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still below the zero line of the indicator hinting at a bearish reversal. Only a crossover above the zero line again could again hint at bullishness.
Therefore, look for palm oil futures to test the resistance levels in the coming sessions.
Supports are at MYR 2,585, 2,530 and 2,475. Resistances are at MYR 2,625, 2,640 and 2,700.
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