CRUDE PALM OIL
Malaysia Derivatives Exchange (MDEX) crude palm oil (CPO) futures prices ended the four-day trading week sharply lower pressured by stale-bull liquidation and book-squaring linked to profit-taking. The extended technical selling throughout the week forced the market to trade at its lowest levels in three weeks during Thursday’s sell-off.
News that China would start accepting applications from processing companies for fresh palm oil import quotas generated little bullish interest. China is expected to issue import quotas for 2.5 million tonnes of palm oil for 2003 with the bulk to be imported from Malaysia and Indonesia.
The benchmark third-month March 2003 futures prices plunged from a life-of contract high of RM1,695 to RM1,609 and finished the week sharply lower at RM1,628, down a hefty RM62 per tonne from previously.
Technically, the March 2003 CPO futures prices ended the week bearish and indicated the downward technical correction was not over. Continuation of the pullback this week could take prices lower for a test of the immediate chart support at the RM1,610–RM1,620 levels. Violation of this support could trigger aggressive stale-bull liquidation and take the March contract lower to its minor support at RM1,580–RM1,550 in the near term.
Chart resistance for this week is seen at the RM1,640–RM1,650 levels. Any rebound to these levels could attract strong hedge selling interests from producers.
The chart outlook remains friendly for the first quarter this year. The eight-month rally of 2002 had reflected almost all the bullish expectations on imports from India and China, and the buoyant market conditions can be sustained in the first-quarter 2003 only if exports during this period remain high at around 950,000 to one million tonnes a month.
Brazil and Argentina’s weather and soybean growing conditions would play a major role in determining the world’s vegetable oil price direction in the first quarter. Historically, the world’s vegetable oils market has never failed to react bullishly to news and forecasts for hot and dry weather in these countries during the vital stages of crop development. Based on the weekly chart, the market has a trading range of between RM1,700 and RM1,550 during the first quarter 2003. Minor support and major chart support is seen for this period at the RM1,500 and RM1,400–RM1,350 levels.
The daily technical indicators ended the week bearish and indicated the downward wave would continue into this week’s trading.
The daily stochastics triggered the sell signal on Dec 30 and indicated the market has entered a bearish extended-move. The oscillators per cent K and D settled the week sharply lower at 18.39% and 28.31% respectively.
The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) flashed the sell signal when it triggered the crossover on Dec 30, 2002, and stayed bearish at Friday’s close. The 3- and 7-day ESA-lines concluded the week sharply lower at 1,637 and 1,648 points respectively.
Analysis of the MAV-lines shows the bearish cycle that started four sessions ago could continue this week.
The daily moving-average convergence/divergence (MACD) turned bearish on Dec 30 and confirmed the bearish trend would extend into this week’s trading. The daily MACD ended the week below the trigger-line and settled at 20.48 and 25.44 points respectively.
The daily momentum index (MI) fell below the 100-point mark on Jan 3 and settled the week sharply lower at 99.21. Analysis of this daily oscillator indicates the market’s immediate momentum is bearish.
SOYOIL futures on the Chicago Board of Trade slipped in lacklustre trading during the shortened New Year holidays and rebounded moderately on speculation of potential China soybean buying and bullish expectations of this week’s US Department of Agriculture (USDA) monthly report. Traders are expecting the USDA to lower US production estimates, raise exports and show a significant drop in the carry-over stocks.
The March 2003 futures prices ranged moderately from a week's high of 21.47 to 21.09 US cents and closed Thursday slightly higher at 21.46 US cents, up 0.05 US cent per lb from previously.
Based on chart, the March 2003 soyoil futures prices settled the week negative and indicated the downward pressure would carry over into this week’s trading. Chart resistance for this week is unchanged from a week ago at the 21.65–21.70 US cents per lb levels. Failure to push above these levels could set the stage for further long-liquidation and take the March contract lower to test its immediate support at 21.00–21.10. Breaching of these levels could send the market on a bearish trend and seek fresh support at the 20.70–20.60 US cent levels.
The chart outlook for the first-quarter 2003 remains neutral-to-slightly bearish. Based on the weekly-chart, the market has an immediate support at the 21.00 US cents level. Violation of this important chart support could trigger a strong wave of technical selling and pressure the March contract below the 19.00–19.50 US cents level.
Chart resistance for the first quarter is seen at the 22.00–22.50 US cent levels. The market’s main bullish trend would resume if these levels are successfully vaulted.
The daily technical indicators ended mostly bearish and called for more downward adjustments this week. The daily stochastics triggered the sell signal on Dec 27 and remained bearish at Thursday’s close. The daily oscillator per cent K finished above the oscillator per cent D and closed lower at 22.92% and 29.69% respectively. Analysis of the daily stochastics suggests the market would stay under selling pressure this week.
The daily moving-average convergence/divergence (MACD) remained bearish for the near-term market and indicated the downward trend would continue this week. The daily MACD closed below the trigger-line and settled slightly lower at minus 0.10 and 0.07 of a point respectively.
The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) remained bearish at Thursday’s close and pointed to further price erosion this week. The 3- and 7-day ESA-lines ended the week lower at 21.42 and 21.50 respectively.
The daily momentum index (MI) settled the week slightly lower in the negative territory at 98.40 points. Analysis of the daily MI shows the market’s immediate direction is down.
COCOA futures prices on the Coffee, Sugar & Cocoa Exchange in New York came alive after the long year-end holidays and skyrocketed to an 11-week-high close on Thursday. Strong speculative and fund buying emerged as fears of supply disruption from top producer, Ivory Coast, intensified after the renewed fighting between government troops and rebels forces.
The March 2003 cocoa prices surged to a week's high of US$2,135 from US$1,988 and settled the week at their life-of-contract high at US$2,099, up US$47 per tonne from a week ago. Based on chart, the March 2003 cocoa futures prices closed the week bullish and are expected to continue with that momentum this week. An immediate chart support now stands at the US$2,080–US$2,060 levels. The immediate market is expected to stay bullish if these levels are not violated. Overhead resistance for this week is adjusted higher to the US$2,160–US$2,180 levels. A minor resistance stands at the US$2,200 per tonne level.
The chart outlook remains bullish for the first quarter 2003. Trading would likely be confined to the US$2,000 to US$2,300 per tonne range. Civil war in Ivory Coast would dominate trading in the early part of this year and tight supplies owing to the problems there could send the market sharply higher.
The daily technical indicators closed the week positive and indicated the positive trend would be sustained this week.
The daily stochastics turned bullish when it triggered the buy signal on Jan 2 and indicated the upward trend would continue. The daily oscillator per cent K closed above the oscillator per cent D and ended at 46.75 and 42.81% respectively.
The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) flashed the buy signal on Jan 2 and remained positive for the immediate-term market. The 3- and 7-day ESA-lines ended the week higher at 2,064 and 2,054 respectively.
The daily moving-average convergence/divergence (MACD) retained its sell signal and indicated a strong positive convergence. The daily MACD and trigger-line closed lower in the positive zones at 51.49 and 51.88 points respectively. Analysis of this oscillator shows the market is attempting a trend reversal.
The daily momentum index (MI) rebounded from recent losses and settled lower in the positive territory at 100.60 points. The daily MI signalled the market’s immediate momentum is positive.
TIN prices on the Kuala Lumpur Tin Market ended the week marginally higher boosted by light buying interests and influenced by the firmer close of the London Metal Exchange. Lack of selling interests from producers helped the market to consolidate at higher levels.
Cash tin prices ended the week at US$4,265 per tonne, up US$30 per tonne from a week ago. Trades for the week ranged from US$4,265 to US$4,235 per tonne.
Volume for the week improved slightly to 154 from 145 tonnes a week ago.
Based on chart, cash tin prices ended the week slightly positive and are expected to edge higher this week. Chart support is revised higher to the US$4,250–US$4,230 per tonne level. The current positive setting would turn negative if these levels are violated. Chart resistance is seen at US$4,280 to US$4,300.
The market trend for the first quarter 2003 is expected to be sideways. A trading band is seen at the US$4,350 to US$4,200 levels.
The weekly technical indicators closed slightly positive and indicated further consolidation in the market this week.
The weekly stochastics triggered the buy signal on Friday and called for a slightly higher trading range this week. The weekly oscillators per cent K and D ended lower at 42.47% and 41.85%. Analysis of the stochastics indicates a mild upward correction has started.
The weekly moving-average convergence/divergence (MACD) remained negative and failed to flashed a trend-change signal. The MACD and trigger-line closed lower in the positive territory at 0.044 and 0.045 of a point respectively.
The 3- and 7-week exponentially smoothed moving-average price lines (ESA-lines) flashed the buy signal on Friday and indicated a positive cycle-change has begun. The 3- and 7-week ESA-lines ended the week higher at 4,250 and 4,245 respectively.
The weekly momentum index slipped below the 100-point mark and closed lower at 98.95. Based on the weekly MI, the market is not out of its bearish cycle.