Comments
Crude palm oil futures on the Bursa Malaysia Derivatives Exchange ended sharply lower on Monday on worries over gloomy global economic outlook and demand concerns stemming from it.
Despite falling production and recent flood concerns, waning export demand plus the rout in crude oil continue to pressure the edible oil complex.
Malaysian exports of palm oil products fell 17.7 per cent to 886,189 tonnes between January 1 and 25 compared with a month ago, according to cargo surveyor Intertek Testing Services. Another cargo surveyor estimated exports to have fallen by 19 per cent compared with the previous month.
CPO active month April futures are moving lower as expected. As mentioned in the earlier update, decline below MYR 2,320/tonne has hinted at weakness again.
Prices could now dip to MYR 2,275 followed by 2,235-40 levels. Crucial support is at 2,170-75 levels, being a rising trend line support zone.
We still view this decline as a corrective dip within a minor uptrend. Close below MYR 2,165/tonne could dash our bullish hopes and such a fall below 2,160 could see prices once again 2,075-85 levels or even lower. Expect prices to rise higher, while important supports hold. Only a rise below MYR 2,285/tonne will revive bullish hopes again in the coming sessions.
We will have to once again review the wave counts, but will wait for a crossover above MYR 2,400/tonne to do that. Till then we will stick to our earlier assessment.
As mentioned earlier, a downtrend again could be confirmed on a close below MYR 2,175 levels. This once again puts the spot light on the MYR 1,700/tonne-mark, which we anticipated earlier.
We are now tracking a final leg of an impulse in a declining trend with potential targets near 1,850 or even lower to 1,700 levels. Ideally, the next leg of a larger upmove could potentially begin from this area.
RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD have gone above the zero line of the indicator hinting at a bullish reversal.
Only crossover again below the zero line again could hint at a resumption of the bearish trend.
Therefore, look for palm oil futures to test the support levels.
Supports are at MYR 2,175, 2,105 and 2,075. Resistances are at MYR 2,235, 2,280 and 2,330.
The author is the Director of Commtrendz Research. There is risk of loss in trading.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.