Malaysian palm oil futures on the Bursa Malaysia Derivatives ended marginally higher on Monday after sliding to a six-week low last week, with a steep decline in exports keeping a lid on the market.

Exports of Malaysian palm oil products for July 1-10 fell 34.7 per cent to 308,875 tonnes from 473,307 tonnes shipped June 1-10, cargo surveyor Societe Generale de Surveillance said on Friday.

CPO active month September futures are moving in a volatile range. Since the earlier support at MYR 2,210-20/tonne was broken, it has turned into a near-term resistance.

As mentioned in the previous update, present price structures suggest more chances of a decline in the coming sessions and a decline below 2,185, hinted at further weakness. Such a move could revive bearish expectations for a decline lower towards 2,120-25 levels, being a rising trend line support point.

Favoured view expects prices to consolidate in a broad range and find supports mentioned above and then gradually edge higher again.

The bigger picture seems to be turning gradually friendly despite recent volatility and due to that we are giving up on the broad bearish view we have had in the medium to long-term picture.

Only, a close below MYR 2,070 could trigger a stronger decline from there, which does not look likely as of now.

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 2,175 levels. This once again puts the spot light on the MYR 1,700 a 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 up move could potentially begin from this area. But a direct rise above 2,500 in huge volumes could indicate a turnaround suggesting a possible move to 2,800 later in the year.

RSI is in still the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are above the zero line of the indicator again hinting at a bullish trend.

Only a crossover again below the zero line could hint at a resumption of the bearish trend.

Therefore, look for palm oil futures to correct lower initially and then rise again.

Supports are at MYR 2,165, 2,145 & 2,120. Resistances are at MYR 2,210, 2,285 & 2,325.

The author is the Director of Commtrendz Research. There is risk of loss in trading

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