CPO has limited upside this week


THE Malaysia Derivatives Exchange (MDEX) crude palm oil futures prices turned volatile in wide swings last week as both the bears and bulls had demonstrated equal dominance in the exchange. Prices initially sank on a heavy sell-off with pressure coming from large commercial buy-hedge unwinding and pressure the market to its lowest levels for the year.  

Talks of shipping problems due to the war in Iraq and bearish sentiment linked to lower demand from Pakistan encouraged a strong decline. However, the market managed to enter into a strong rebound towards mid-week as refiners' aggressive buying in both the cash and futures market triggered off buy-stops and caused the market to regain all of its previous losses and settled the week with marginal gains.  

Expectations that the export estimates for March due for release today would exceed one million tonnes prompted some late buying.  

The benchmark third-month June 2003 futures ranged from an intra-week high of RM1,470 to RM1,366 and closed the week at RM1,461, up RM6 per tonne from a week ago.  

Chart-wise, the June futures closed the week positive and signalled that the upward momentum could continue into the early part of this week. Chart resistance for this week is seen at the RM1,470-RM1,480 level. Penetration of this immediate trading barrier could send prices higher for a test of its minor resistance at the RM1,500 level. Failure to successfully break above this chart resistance would indicate that the market is toppish and could result in a technical drawback. Chart-support for this week is pegged at the RM1,430-RM1,440 level. Breaching of this chart support could trigger off another wave of selling and take the market lower to re-test its minor support at the RM1,400-RM1,380 level.  

The daily technical indicators ended the week bullish and indicated that the upward momentum would continue into the early part of this week’s trading.  

Crude Palm Oil

The daily stochastics triggered the buy signal on March 26 and stayed positive during Friday’s close. The oscillator per cent K and D ended the week sharply higher at 67.78% and 45.13% respectively. Analysis of the daily stochastics shows that the market’s upward wave that started on March 26 is not over.  

The 3-day and 7-day exponentially smoothed moving-average price-lines (ESA-lines) turned bullish during Friday’s close and signalled that a bullish wave had started. The 3-day and 7-day ESA-lines settled the week lower at 1,445 and 1,443 points respectively.  

The daily moving-average convergence/divergence (MACD) (not shown in the chart) indicated that a cycle change had started when it triggered the buy-signal during Friday’s close. The daily MACD settled the week above the trigger-line and closed higher at minus 38.30 points and minus 39.84 points respectively.  

The daily momentum index (MI) failed to move above the 100-point mark and ended the week higher at 98.65 points. Analysis of daily MI shows that the market’s immediate momentum is positive.  

Soyoil

Soyoil futures at the Chicago Board of Trade (CBOT) plunged on aggressive funds and commercial selling prompted by the sharp declines in palm oil prices in early trading and rebounded to regain half of its earlier losses to finally close Thursday in the minus column. The late strength was attributed to good soybean export sales and talks of further purchases of soybeans by China.  

The May 2003 soyoil futures prices fell from a weekly high of 21.74 US cents to 20.70 US cents and ended Thursday lower at 21.29 US cents, of 0.25 US cents per lb from a week ago.  

Chart-wise, the May 2003 soyoil futures prices closed the week neutral and are expected to continue in choppy trading range this week. Chart resistance for this week is seen at the 21.40-21.60 US cents per lb level. A successful push above this level could take the market higher and re-test recent highs at the 21.80-21.90 US cents per l. level. Chart-support for this week is lowered to the 21.20-21.10 US cents level. Breaching of this support level would signal the resumption of the downward wave.  

The daily technical indicators ended the week mixed and indicated that the market could enter sideways band-trading this week.  

The daily stochastics turned negative last week and closed the week with a positive convergence to indicate that an upward cycle is about to start. The daily oscillator per cent K ended below the per cent D and finished the week lower at 35.08% and 40.42% respectively.  

The daily moving-average convergence/divergence (MACD) remained bullish during Friday’s close and indicated that the market could stay positive for the near term. The daily MACD closed above the trigger-line and settled slightly higher in the positive zones at 0.16 and 0.15 of a point respectively.  

The 3-day and 7-day exponentially smoothed moving-average price lines closed Thursday bullish and indicated that the upward cycle could continue this week.  

The 3-day and 7-day ESA-lines ended the week slightly higher at 21.19 and 21.16 respectively.  

The daily momentum index (MI) remained above the 100-point mark last week and ended lower in positive territory at 102.15 points. Analysis of the daily MI indicates that the market is not out of its positive phase.  

Cocoa

Cocoa futures prices on the Coffee, Sugar & Cocoa Exchange (CSCE) in New York slipped on renewed selling as players found few reasons to buy aggressively as news on fresh political development or renewed violence in the Ivory Coast failed to take place last week. Trading was largely dominated by arbitrage buying on account of sterling weakness against the US dollar and funds and speculators were largely on the selling side.  

The benchmark May 2003 cocoa prices closed Thursday US$80 lower at US$1,911 a tonne with trades ranging from US$1,898 to US$1,995.Chart-wise, the May 2003 cocoa futures prices closed the week negative and are expected to continue lower in band trading this week. Chart-support for this week stands at the US$1,960-US$1,940 level, and violation of this immediate chart support would indicate that a downward cycle has started. Resistance for this week is seen at the US$2,000-US$2,020 level.  

The daily technical indicators closed the week bearish and indicated that the bearish trend would continue this week.  

The daily stochastics closed the week deep in the bearish extended-move zones and indicated a strong bullish convergence. The daily oscillator per cent K closed above the per cent D and settled sharply lower at 7.05% and 9.56% respectively.  

The 3-day and 7-day exponentially smoothed average price-lines (ESA-lines) remained in bearish divergence and called for more downside trading this week. The 3-day and 7-day ESA-lines closed the week lower at 1,923 and 1,948 respectively.  

The daily moving-average convergence/divergence (MACD) triggered the sell-signal on March 25 and remained bearish during Thursday’s close. The daily MACD and trigger-line closed the week lower in negative zones at minus 44.38 and 41.80 points respectively.  

The daily momentum index (MI) fell below the 100-point mark and ended Thursday lower at 95.79 points. Analysis of the daily MI shows that the immediate momentum of the market is bearish.  

Tin

Tin prices on the Kuala Lumpur Tin Market (KLTM) turned bearish last week as sellers became more aggressive following a lack of fresh buying-interests despite the ongoing Iraq war. Prices took a tumble and selling pressure throughout the week forced the market to return all of its previous week’s gains.  

The cash tin prices closed the week sharply lower at US$4,550 per tonne, down US$114 per tonne from previously. Trades for the week ranged from US$4,700 to US$4,550 per tonne.  

Total volume for the week increased to 218 tonnes from 172 tonnes a week ago. 

Chart-wise, the cash tin prices settled the week negative and signalled that the downward momentum could sustain this week. Chart-support for this week is seen at the US$4,550- US$4,520 per tonne level. Breaking of this chart-support would indicate that a downward wave has started. Overhead chart-resistance for this week stands at the US$4,600- US$4,580 level. 

The weekly technical indicators ended the week bearish and pointed to a lower trading range this week.  

The weekly stochastics maintained the sell-signal last week and indicated that a bearish phase had started. The weekly oscillator per cent K and D settled lower at 25.64% and 42.45%. 

The weekly moving-average convergence/divergence (MACD) gave the sell-signal during Friday’s close and confirmed that a bearish wave has started. The MACD and trigger-line ended the week lower in positive territory at 0.115 and 0.117 of a point respectively.  

The 3-week and 7-week ESA-lines failed to trigger the sell-signal and closed with a strong negative convergence. The 3-week and 7-week ESA-lines settled lower at 4,592 and 4,589 respectively.  

The weekly momentum index stayed above the 100-point mark and closed lower at 106.68 points. Analysis of the weekly MI shows that the immediate momentum of the market is negative. 

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