CPO set for range-bound trading


CPO

MALAYSIA Derivatives Exchange (Mdex) crude palm oil futures prices finished the week moderately higher boosted by light short-covering and speculative buying. Traders unwinded earlier short positions when the market failed to react negatively to Societe Generale de Surveillance’s (SGS) lower Malaysian export estimates for the first 20 days of February at 511,921 tonnes, off from 625,659 tonnes in the same period a month ago.  

Crop forecaster PALMIS Management’s February estimates provided the market with a slight positive undertone. PALMIS estimated the Malaysian palm oil production 13% lower at 750,000 tonnes and pegged end-February stocks at 950,00-960,000 tonnes as compared to 1.10 million tonnes at end-January. Exports in February were estimated sharply lower at 790,000-795,000 tonnes compared to 854,077 tonnes in January.  

The benchmark third-month May 2003 futures rose from an intra-week low of RM1,590 to RM1,625 and settled the week up RM21 from a week ago at RM1,613 per tonne.  

Chart-wise, the May 2003 crude palm oil futures ended the week neutral-to-slightly positive and are expected to resume with its band trading this week. An important chart-support for this week is seen at the RM1,605-RM1,600 level. Violation of this immediate term chart-support would signal that the upward cycle that started seven days ago has ended. Minor chart-support for this week is seen at the RM1,580-RM1,585 level. Chart resistance for the immediate term stands at the RM1,620-RM1,625 level.  

The daily technical indicators settled the week mixed and indicated that the market would head for further range-bound trading this week.  

The daily stochastics triggered the sell-signal during Friday’s close and signalled that the futures may move into a downward adjustment this week. The oscillator per cent K and D closed the week higher at 66.94% and 69.72% respectively. Based on the daily stochastics, the market has completed its upward wave which started on Feb 10.  

The 3-day and 7-day exponentially smoothed moving-average price-line (ESA-line) gave the buy-signal on Feb 18 and retained its positive divergence during Friday’s close. The 3-day and 7-day ESA-lines ended the week higher at 1,610 and 1,607 points respectively. As at Friday’s close, the ESA-lines are still bullish for the immediate term trend. 

The daily moving-average convergence/divergence (MACD) (not shown in the chart) triggered the buy-signal on Feb 19 and indicated that the market’s immediate momentum is positive. The daily MACD closed the week above the trigger-line and settled the week higher at minus 5.65 points and minus 6.84 points respectively.  

The daily momentum index (M.I) pushed above 100-point mark on Feb 20 and closed higher at 101.19 points. Analysis of MI indicates that the market’s momentum is constructive.  

Soyoil

Soyoil futures at the Chicago Board of Trade (CBOT) ended moderately higher after a technical session that encouraged some of the earlier shorts to cover positions. Good crop weather in the United States and South America failed to dampen the slightly positive sentiment. Traders instead took the leads from the National Oilseeds Processors Association (NOPA) end-January soyoil stocks at 1.924 billion lb, which was down from December stocks of 1.966 billion lb. 

The May 2003 soyoil futures prices advanced from a weekly-low of 20.30 US cents to 20.80 US cents and managed to closed the week higher at 20.79 US cents, up 0.46 US cents per lb from a week ago. 

Chart-wise, the May 2003 soyoil futures prices concluded the week positive and indicated that the five-day old upward cycle could continue this week. Chart resistance for this week is adjusted higher from a week ago to the 20.90-21.00 US cents per lb level. Failure to push above this immediate chart hurdle could result in a mild technical pullback this week. Chart-support for this week is seen at the 20.60-20.50 US cents level. Breaking of this uptrend support-line would signal the start of a technical correction. Minor support for this week stands at the 20.40-20.30 US cents level.  

The daily technical indicators closed the week positive and signalled that the market has the underlying bullish momentum for more gains this week.  

The daily stochastics ended the week in the bullish extended-move zones and indicated a strong negative convergence during Thursday’s close. The daily oscillator per cent K ended above the oscillator per cent D and closed sharply higher at 98.01% and 87.09%. Analysis of the daily stochastics showed that the market is slightly toppish at current levels.  

The daily moving-average convergence/divergence (MACD) turned bullish and gave the buy-signal on Feb 18. The daily MACD closed above the trigger-line and finished marginally lower at minus 0.09 and minus 0.14 point respectively.  

The 3-day and 7-day exponentially smoothed moving-average price lines turned positive last week and signalled that the upward cycle could be sustained. The 3-day and 7-day ESA-lines closed the week higher at 20.66 and 20.53 respectively.  

The daily momentum index (MI) remained below the 100-point mark and closed at 99.23 points. Analysis of the daily MI indicates that the market is still in the negative phase.  

Cocoa

Cocoa futures prices on the Coffee, Sugar & Cocoa Exchange (CSCE) in New York gave up a huge portion of its war premium last week as the market plunged US$217 a tonne on Thursday on aggressive long liquidation by speculators and commodity funds. Bearish sentiment dominated on ideas that finally peace will finally come to the Ivory Coast.  

The May 2003 cocoa prices plunged from a weekly-high of US$2,309 to US$2,045 and closed Thursday sharply lower at US$2,072, down a US$279 per tonne from previously.  

Chart-wise, the May 2003 cocoa futures prices have turned technically bearish following last week's sell-off and are expected to stay under fresh selling pressure in the coming week. Margin-call pressure could take the May futures below the US$2,000 per tonne level if the market fails to recover from its excessive losses early this week. Chart-support for this week is revised sharply lower from a week ago to the US$2,040-US$2,200 level. Breaking of this chart-support would signal the continuation of the bearish trend and send the May futures lower to test its next support at the US$1,900-US$1,850 per tonne levels. Chart resistance for this week is lowered to the US$2,110-US$2,130 levels. 

The daily technical indicators ended the week bearish and called for more bearish trading this week.  

The daily stochastics triggered the sell-signal on Feb 19 and indicated the start of a downward trend. The daily oscillator per cent K closed below the oscillator per cent D and settled sharply lower at 34.53% and 56.09 % respectively. Analysis of the daily stochastics shows that the excessive recent losses had not resulted in the market reaching an oversold position.  

The 3-day and 7-day exponentially smoothed average price-line (ESA-line) turned bearish on Feb 19 and signalled that the bearish cycle could continue. The 3-day and 7-day ESA-lines finished the week lower at 2,189 and 2,250 respectively.  

The daily moving-average convergence/divergence (MACD) expanded on its the sell-signal last week and closed the week bearish. The daily MACD and trigger-line settled lower in the positive zones at 28.29 and 46.35 points respectively.  

The daily momentum index (MI) broke below the 100-point mark and ended the week lower at 98.11 points. Analysis of the daily MI shows that the market is in a bearish phase.  

Tin

Tin prices on the Kuala Lumpur Tin Market (KLTM) resumed its upward momentum on fresh buying-interests and settled Friday with a new high for 2003. Bullish trend in tin and other base metals in the London Metal Exchange (LME) inspired by the prospects of war in Iraq supported the market’s trend. 

The cash tin prices finished the week sharply higher at US$4,710 per tonne, up US$160 per tonne from previously. Trades for the week fluctuated widely from US$4,620 to US$4,4795 per tonne.  

Total volume for the week rose to 199 tonnes from 130 tonnes a week ago. 

Chart-wise, the cash tin immediate chart-picture outlook remains bullish and appears set for more advances this week. Chart-support for this week is revised higher to the US$4,650-US$4,680 per tonne level. The bullish cycle is expected to stay intact if these levels are not violated this week. Chart-resistance for this week is seen at the US$4,750-US$4,780 level. A successful push above this immediate chart resistance could take the market higher and test its next upward target at the US$4,850-US$4,900 per tonne level. 

The weekly technical indicators closed the week slightly bullish and point to a higher trading level this week.  

The weekly stochastics retained its sell-signal of Jan 30 and closed the week with a strong positive convergence to indicate that a trend change has started. The weekly oscillator per cent K and D closed slightly lower at 68.39% and 71.78%. 

The weekly MACD closed the week bullish and indicated that the upward trend would continue this week. The MACD and the trigger-line ended the week in positive territory at 0.10 and 0.08 point respectively.  

The 3-week and 7-week exponentially smoothed average price-lines (ESA-lines) settled the week with a strong positive divergence and signalled that the upward trend is intact. The 3-week and 7-week ESA-lines closed higher at 4,603 and 4,509 respectively. 

The weekly MI remained above the 100-point mark and closed higher at 109.53 points. Analysis of the weekly MI indicates that the market’s immediate cycle is bullish. 

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