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Malaysian palm oil futures ended higher on short-covering on expectations of better exports and a buoyant soya complex. Forecasts for cold and wet weather causing further delays to harvest around the US Midwest also contributed to the bullish tone supporting the soyabean market. The US Agriculture Department’s October crop report also forecast soyabean production below market expectations. Cargo surveyors will announce the exports data for the period October 1-10. Th e Malaysian Palm Oil Board (MPOB) will also announce its reports of September exports, production and stocks next week, which may show a rise in stocks due to lower exports and higher production, however this seems to have been already priced in.

CPO futures are moving in line with our expectations. Any major weakness in CPO seems to have got arrested. Price structures indicate upside in the near-term now. Direct rise above 2,100 Malaysian ringgit (MYR) a tonne could indicate bullish strength for 2,185 MYR/tonne or even higher towards 2,215 MYR/tonne. While above 2,065 MYR/tonne, we favour December CPO to rally higher and test the potential targets mentioned above. However, a direct fall below 2,021 MYR/tonne could dent our bullish expectations. Favoured view expects a rally higher.

A new impulse began from 1,427 MYR/tonne and this could be the third wave, which has at 4,486 MYR/tonne. A prolonged corrective fourth wave in the form of A-B-C is in progress now. A possible wave “C” could have begun with possible targets extending even lower towards 1,200 MYR/tonne. This could be negated on a rise above 2,500 MYR/tonne and a fresh review of the wave counts. RSI is in the neutral zone now, indicating that it is neither overbought nor oversold. The averages in MACD are below the zero line of the indicator indicating bearishness. A cross over above the zero line again could indicate a bullish reversal. Therefore, look for palm oil futures to test the resistance levels now.

Supports are at MYR 2,068, 2,021 and 1,962. Resistances are at MYR 2,100, 2,185 and 2,210.

Gnanasekaar .T

(The author is the Director of Commtrendz Research and also in the advisory panel of Multi Commodity Exchange of India Ltd (MCX). The views expressed in this column are his own and not that of MCX. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.)

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