Commodities

Palm oil to slip initially, rise

GnanasekAar T | Updated on January 19, 2018 Published on January 18, 2016


Malaysian palm oil futures on BMD ended higher on Monday, as the ringgit weakened and stability returned to Chinese markets.

The ringgit weakened to 4.4170 per dollar before gaining by nearly 0.1 per cent in the evening. Palm oil inventories in Malaysia dropped to their lowest level since February 2015, as dry weather effects of the El Nino kicked in. Falling output in both Malaysia and Indonesia continues to underpin CPO prices, but lack of physical demand continues to weigh on prices. CPO active month April futures are moving in line with our expectations. Though decline in the previous week looked to continue further, the trend still remains bullish and our favoured view expects support levels at MYR 2,385/ton, followed by MYR 2,360-2,365/ton, could still hold and prices could once again attempt to rise.

Prices moved exactly as per expectations. Supports are now seen at MYR 2,445-2,450/ton levels. Only an unexpected decline below MYR 2,430/ton could hint that the expected rise above MYR 2,510-2,520/ton might not materialise.

Such a decline could open the downside again targeting MYR 2,400-2,405/ton levels or even lower to MYR 2,350-2,365/ton levels. Favoured view expects a corrective decline to supports mentioned above and then prices to rise higher again towards a technical objective near MYR 2,630-2,640/ton levels. We reassess the wave counts, as prices have crossed over above MYR 2,370-2,400/ton. One of our targets at MYR 1,850/ton was met.

The current move could push higher towards MYR 2,645/ton initially and then could correct lower in a corrective pattern towards MYR 2,310/ton or even lower to MYR 2,250/ton, and then subsequently rise towards a medium to long-term target at MYR 2,900/ton, which could bring this current impulse to an end.

But, this is clearly a medium to long-term expectation and not to be mistaken for a short-term view. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. As mentioned in the earlier update, the averages in MACD are above the zero line of the indicator hinting a bullish trend to be intact. Only a crossover again below the zero line could hint at a reversal in trend to bearish.

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

Supports are at MYR 2,405, 2,375 & 2,350; while resistances are at MYR 2,495, 2,520 & 2,600.

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

Published on January 18, 2016

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Sincerely,

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.