Last week the Malaysia Derivatives Exchange (MDEX) crude palm oil (CPO) futures prices expanded on their downward correction with the benchmark third-month May futures making fresh lows for the years and dropping to the lowest levels since Nov 1, 2002.
Light buying support emerged towards mid-week on talks that India may cut palm oil import duty to 55% from 65%. Edible oil import duties were left unchanged in India's 2003/04 budget on Feb 28 and traders are speculating that revision of the duty would take place, citing the case of the 2001/02 budget where cuts on edible oil duties were made shortly after the budget announcements.
The Malaysian Palm Oil Board (MPOB)'s monthly figures for February provided little trading incentives as they fell within traders’ expectations. MPOB estimated that February’s palm oil exports sharply lower at 684,927 tonnes, down 20% from 856,889 tonnes in January. End-February stocks were also projected lower at 1.09 million tonnes from 1.10 million at end-January. CPO output was estimated 11.32% lower from January at 765,543 tonnes.
The benchmark third-month May 2003 futures ranged from an intra-week high of RM1,534 to RM1,481 and closed the week at RM1,504, down RM24 per tonne from a week ago.
Based on chart, the May futures ended the week neutral-to-slightly positive and are expected to stay in band trading within the RM1,480–RM1,510 range this week.
Development of fresh bullish momentum could, at best, take the May futures prices higher for a test of the minor chart resistance at RM1,530–1,540s. Failure to vault this immediate chart barrier could result in a softer market. Violation of the lower trading band support at RM1,480 this week would signal the resumption of the downward trend and pressure values lower for a test of the minor chart support at the RM1,450–RM1,430 levels.
The daily technical indicators ended mixed and pointed to more sideways band trading this week.
The daily stochastics cleared from the bearish extended-move zones on March 12 and held on to their buy signal at Friday’s close. The oscillators per cent K and D finished the week sharply lower at 33.54% and 20.19% respectively.
Based on the daily stochastics reading, the market could trend slightly higher and regain some of its recent excessive technical losses this week.
The 3- and 7-day exponentially smoothed moving-average price-lines (ESA-line) stayed bearish at Friday’s close and signalled the downward cycle is not over. The 3- and 7-day ESA-lines settled the week sharply lower at 1,499 and 1,510 points respectively.
The daily moving-average convergence/divergence (MACD) (not shown in the chart) retained its sell signal intact and indicated the market’s main trend is still bearish.
The daily MACD ended the week below the trigger-line and settled lower at minus 30.47 and minus 27.26 points respectively.
The daily Momentum Index (MI) closed below 100-point mark and settled the week marginally lower at 94.35 points. Analysis of daily MI indicates the market is in a bearish phase.
Soyoil futures prices on the Chicago Board of Trade surged on a strong wave of technical buying from funds and speculative traders during early trading last week and held steady for the rest of the week before closing Thursday with moderate gains.
Penetration of the chart congestion highs on Tuesday prompted heavy buying and forced many short position holders to bail out of the market. Slightly bearish US Department of Agriculture supply-and-demand data released last week helped dampened sentiment and kept a lid on advances.
The May 2003 soyoil futures prices climbed from a week's low of 20.16 to 20.91 US cents and closed the week higher at 20.76 US cents, up 0.37 US cent per lb from a week ago.
Based on chart, the May 2003 soyoil futures prices closed the week positive and signalled the market could settle for some congestion trading this week. Chart resistance is revised higher to the 20.90–21.00 US cents levels. A successful push above these levels could provide the upward momentum for a test of the 22.00 US cents per lb level in the near term.
Chart support for this week is seen at the 20.60–20.50 US cents levels. Breaching of this support would signal the market’s upward momentum has fizzled.
The daily technical indicators ended the week positive and indicated the trend would be sustainable this week.
The daily stochastics triggered the buy signal on March 10 and stayed positive at Thursday’s close. The daily oscillator per cent K ended above the oscillator per cent D and closed the week sharply higher at 75.73% and 65.16% respectively.
Analysis of this oscillator shows the market is slightly overbought.
The daily moving-average convergence/divergence (MACD) triggered the buy signal last week and closed on a positive note. The daily MACD closed above the trigger-line and settled lower in the minus column at 0.01 and minus 0.02 of a point respectively. The daily MACD shows the market trend is positive.
The 3- and 7-day exponentially smoothed moving-average price lines closed Thursday bullish and indicated a positive wave has developed. The 3- and 7-day ESA-lines ended the week higher at 20.70 and 20.62 respectively.
The daily Momentum Index (MI) penetrated the 100-point mark last week and settled in the positive territory at 100.43. Analysis of the daily MI shows the market has entered a bullish phase.
Cocoa futures prices on the Coffee, Sugar & Cocoa Exchange in New York ended Thursday lower on speculative selling and long-hedge unwinding. Switching dominated trading last week as the new government in Ivory Coast was formed with little violence.
Ivory Coast’s latest power-sharing government formed to settle six months of civil war got off to a weak start on Tuesday as rebel leaders and the main opposition party failed to attend the first cabinet meeting.
The benchmark May 2003 cocoa prices closed down US$105 at US$1,930 a tonne, after trading in a US$2,019–US$1,930 range.
Based on chart, the May 2003 cocoa futures prices closed the week negative and are expected to resume their downward pressure this week. Chart support at the US$1,980–US$1,950 levels were violated at Thursday’s close and measurement of the downward breakout indicates the immediate-term market has a downward objective at US$1,900–US$1,850.
Chart resistance for this week is adjusted lower to the US$1,950–US$1,980 levels.
The daily technical indicators closed the week bearish and signalled more downward pressure on prices this week.
The daily stochastics triggered the sell signal on March 11 and indicated the bearish momentum could continue into this week’s trading. The daily oscillator per cent K ended below the oscillator per cent D and finished sharply lower at 17.89% and 44.53% respectively.
The 3- and 7-day exponentially smoothed average price lines (ESA-lines) triggered the sell signal on March 10 and closed the week bearish. The 3- and 7-day ESA-lines ended the week sharply lower at 1,957 and 1,983 respectively.
The daily moving-average convergence/divergence (MACD) continues to suggest further declines in the market. The daily MACD and trigger-line closed the week higher but remained in the negative zones at minus 56.34 and 53.55 points respectively.
The daily Momentum Index (MI) remained below the 100-point mark and closed slightly higher at 94.70. Analysis of the daily MI shows the market is in a bearish phase.
Tin prices on the Kuala Lumpur Tin Market sank on renewed selling and finished the week at their lowest level in five weeks. Trading volume remained thin as players retreated in anticipation of further weakness.
Cash tin prices closed the week sharply lower at US$4,535 per tonne, down US$130 per tonne from previously.
Trades for the week ranged from US$4,650 to US$4,525 per tonne.
Volume for the week fell sharply to 166 from 205 tonnes a week ago.
Based on chart, cash tin prices are in downtrend and the bearish momentum is expected to continue into this week’s trading. Chart support for this week is lowered to the US$4,500–US$4,450 per tonne level. Violation of this support would confirm the bearish trend would continue.
Chart resistance for this week stands at the US$4,600–US$4,580 levels.
The weekly technical indicators ended mostly bearish and called for a lower market this week.
The weekly stochastics triggered the sell signal last week and indicated the market’s main trend is bearish. The weekly oscillators per cent K and D settled sharply lower at 57.68% and 71.80%.
The weekly moving-average convergence/divergence (MACD) ended with a strong negative convergence and indicated the immediate trend is negative. The MACD and the trigger-line ended the week lower in the positive territory at 0.12 and 0.11 of a point respectively.
The 3- and 7-week exponentially smoothed average price lines (ESA-lines) closed bearish and indicated a strong trend change signal. The 3- and 7-week ESA-lines closed lower at 4,580 and 4,600 respectively.
The weekly Momentum Index (MI) managed to hold above the 100-point mark and closed lower at 107.00. Analysis of the weekly MI shows the immediate momentum of the market is still bearish.