CPO bearish trend to continue


THE Malaysia Derivatives Exchange (MDEX) crude palm oil futures prices extended its three-week old downward trend amid fresh selling and long-hedge liquidation and fell to its lowest levels since October 2002. Fear that the war in Iraq and shipping disruption could hamper deliveries to consumers. Bearish sentiment for the week was linked to talks that Pakistan would likely import less palm oil and more soyoil now that the lifting of economic sanction by the US would provide an annual US$250mil aid.  

The benchmark third-month June 2003 futures fell from an intra-week high of RM1,498 to RM1,436 and concluded the week at RM1,455, down RM49 per tonne from a week ago.  

Chart-wise, the June futures ended the week bearish and are set to resume its sideways-to-lower trading pattern this week. An important chart-support is seen for this week at the RM1,440-RM1,430 level. Violation of this trading support is technically bearish as it could trigger off fresh speculative and hedge selling and send the market on a downward wave. Minor resistance at RM1,400-RM1,380 would likely be tested in the event of such an eventuality.  

The daily technical indicators closed the week mostly bearish and called for more downside trading this week.  

The daily stochastics ended the week bearish and indicated a mild convergence. The oscillator per cent K and D closed the week sharply lower at 25.27% and 27.18% respectively. Analysis on the daily stochastics indicates that the market is likely to head east with a downward bias.  

Crude Palm Oil

The 3-day and 7-days exponentially smoothed moving-average price-line (ESA-line) stayed bearish during Friday’s close and indicated that the bearish trend is intact. The 3-day and 7-day ESA-lines closed the week sharply lower at 1,459 and 1,474 points respectively.  

The daily moving-average convergence/divergence (MACD) (not shown in the chart) remains bearish for the immediate-term market and indicates that bearish pressure would continue this week. The daily MACD closed the week below the trigger-line and finished lower at minus 36.21 points and minus 32.61 points respectively.  

The daily momentum index (MI) remained below the 100-point mark and closed the week slightly higher at 97.59 points. Analysis of the daily MI indicates that the market’s immediate momentum is negative.  

Soyoil futures at the Chicago Board of Trade (CBOT) rallied in early trading and held steady for most of the sessions on fund buying over concerns about US Midwest pre-planting soil moisture levels. They closed Thursday with moderate gains. Rains across the US Midwest over the last few days failed to match earlier expectations and reports by both the government and private weather forecasters calling for dry US Midwest spring and summer weather prompted moderately active buying last week.  

The May 2003 soyoil futures prices surged from a weekly low of 20.69 US cents to 21.30 US cents and settled Thursday sharply higher at 21.17 US cents, up 0.38 US cents per lb. from a week ago. 

Chart-wise, the May 2003 soyoil futures prices ended the week constructive and are expected to stay in band of congestion trading this week. Chart resistance for this week is adjusted higher to the 21.20-21.40 US cents per lb. levels. Penetration of these levels could generate fresh bullish momentum and take the market higher into the 22.50 US cents per lb. level. Chart-support for this week stands at the 21.60-20.90 US cents levels. For the immediate term market to stay bullish, these levels must not be vilolated.  

Soyoil

The daily technical indicators closed the week bullish and signalled that the market could stay buoyant this week.  

The daily stochastics triggered the buy signal on March 19 and indicated that the positive trend could be sustained. The daily oscillator per cent K closed above the oscillator per cent D and settled the week at 71.19% and 69.45% respectively.  

The daily moving-average convergence/divergence (MACD) retained its buy signal of a week ago and ended the week on a bullish note. The daily MACD ended above the trigger-line and closed marginally higher in the positive column at 0.1 and 0.06 points respectively. The daily MACD has indicated that the upward wave could be expanded. 

The 3-day and 7-day exponentially smoothed moving-average price lines ended Thursday positive and called for the upward momentum to continue this week. The 3-day and 7-day ESA-lines settled the week higher at 21.10 and 20.95 respectively.  

The daily momentum index (MI) maintained its position above the 100-point mark last week and closed higher in the positive territory at 103.12 points. Analysis of the daily MI shows that the market’s immediate momentum is bullish.  

Cocoa futures prices on the Coffee, Sugar & Cocoa Exchange (CSCE) in New York dipped in early trading and rebounded strongly towards late trading on renewed concerns of fresh problems in the Ivory Coast. Speculators reacted bullishly to news that rebels refused to attend a power sharing cabinet meeting because they were unhappy that the key defence and security posts have not been determined yet. Ivory Coast remains the world’s largest cocoa producer and accounts for about 40% of the world’s output.  

Cocoa

The benchmark May 2003 cocoa prices settled Thursday up US$41 to US$2,029 a tonne, after having ranged between US$2,070 and US$1,954. 

Chart-wise, the May 2003 cocoa futures prices ended the week slightly positive and are set to move higher this week. Chart-support is seen at the US$2,000-US$2,010 level and the positive chart-picture would turn negative if this level is violated. Resistance for the immediate term is seen at the US$2,050-US$2,070 level. 

The daily technical indicators ended the week positive and indicated that the upward wave would continue this week.  

The daily stochastics turned bullish last week and indicated that the market could climb further this week. The daily oscillator per cent K settled above the oscillator per cent D and closed sharply higher at 75.24% and 72.10% respectively.  

The 3-day and 7-day ESA-line turned bullish when it triggered the buy-signal early last week. The 3-day and 7-day ESA-lines settled the week higher at 2,023 and 2,011 respectively. Analysis of the ESA-lines shows that the market could trend higher this week. 

The daily moving-average convergence/divergence (MACD) indicated a trend change signal during Thursday’s close. The daily MACD and trigger-line settled the week higher and closed higher in the negative zones at minus 35.96 and 43.27 points respectively.  

The daily momentum index (MI) penetrated the 100-point mark and closed Thursday higher at 100.70 points. Analysis of the daily MI indicates that the market’s immediate momentum is bullish.  

Tin prices on the Kuala Lumpur Tin Market (KLTM) advanced on fresh buying-interests following the start of the Iraq war and closed the week with strong gains. We had a reverse situation here last week where buyers were seen to be chasing reluctant sellers. Firmer values in the London Metal Exchange (LME) also aided sentiment. 

The cash tin prices ended the week sharply higher at US$4,665 per tonne, up US$130 per tonne from a week ago. Prices fluctuated during the week from US$4,665 to US$4,535 per tonne.  

Total volume for the week improved slightly to 172 tonnes from 166 tonnes a week ago. 

Chart-wise, the cash tin prices ended the week positive and indicated that a minor trend-reversal has taken place. Chart-support for this week stands at the US$4,500-US$4,550 per tonne level. For the newly developed bullish momentum to resume, the market should not fall below this important level this week. Continuation of the upward momentum could send the market higher for a test of its next trading ceiling at the US$4,700-US$4,750 level. 

The weekly technical indicators closed the week mixed and indicated a slightly firmer market this week.  

The weekly stochastics retained its sell-signal last week and signalled that the market is not totally out of its bearish phase. The weekly oscillator per cent K and D ended lower at 44.04% and 58.87%. 

The weekly moving-average convergence/divergence (MACD) turned bullish last week and signalled that the immediate trend is positive. The MACD and trigger-line closed the week higher in positive territory at 0.12 and 0.11 points respectively.  

The 3-week and 7-week ESA-lines ended with a strong positive divergence and point to more upward trading. The 3-week and 7-week ESA-lines ended higher at 4,634 and 4,600 respectively.  

The weekly momentum index remained above the 100-point mark and settled higher at 110 points. Analysis of the weekly MI indicates that the immediate momentum of the market is bullish. 

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