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Malaysian palm oil futures on BMD ended higher on Monday, as market participants positioned ahead of the news of possible duty hikes from Indonesia. After the close of the market, Indonesia set its crude palm oil export tax for April at zero, unchanged from March, the Trade Ministry said on its website. In other markets, oil prices fell further on Monday, with Brent dropping below $55 a barrel, as officials from Iran and six world powers discussed a possible deal over Tehran’s nuclear programme that could bring an end to sanctions and allow an increase in Iranian oil exports. Markets are anticipating good exports to support prices. Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance are due to release data on Malaysia’s March palm oil exports on Tuesday.
CPO active month June futures moved higher as per expectations. As mentioned in the previous update, till the support around 2125-35 MYR/tonne holds in the bigger picture, we will be hopeful of a rise in the coming sessions. Near-term supports are at 2145-50 MYR/tonne followed by very strong support at 2125 MYR/tonne levels. Break of this level however could potentially drag prices lower towards immediate support at 2085-95 MYR/tonne levels. Failure to hold here too could confirm the beginning of a larger downtrend towards 1900 MYR/tonne or even lower. Resistance is now noted at 2220-25 MYR/tonne levels. Favoured view expects now prices to find resistances near 2200-25 MYR/tonne levels and subsequently, we expect the down move to begin again. Direct fall below 2125 MYR/tonne levels could hint that the down move has commenced without the expected resistance. Only a close above 2280 MYR/tonne levels could change the bearish picture to neutral.
We will have to once again review the wave counts, but will wait for a crossover above 2400 MYR/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 2175 MYR/tonne levels. This once again puts the spot light on the 1700 MYR/tonne mark, which we anticipated earlier. We are now tracking a final leg of a impulse in a declining trend with potential targets near 1850 MYR/tonne or even lower to 1700 MYR/tonne levels. Ideally, the next leg of a larger up move 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 below the zero line of the indicator hinting at a bearish reversal again.
Therefore, look for palm oil futures to test the support levels and move higher again.
Supports are at MYR 2145, 2125 & 2085 Resistances are at MYR 2210, 2245 & 2280.
The writer is the Director of Commtrendz Research and there is risk of loss in trading.
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