CPO prices likely to trend lower


By G.M. Teoh

Crude Palm Oil 

The Malaysia Derivatives Exchange (MDEX) crude palm oil (CPO) futures prices advanced in early trading on moderately active technical and speculative buying, but the move was short-lived as selling pressure linked to hedge selling by producers dampened the market and forced prices to close the week in the negative territory. 

The Societe Generale de Surveillance (SGS) export estimates for the first 10 days of April at a lower at 314, 145 tonnes compared with 355,514 tonnes in the same period in March, prompted long-position holders to unwind in anticipation of a lower export figure for the whole of April. 

The benchmark third-month June 2003 futures prices fell from an intra-week high of RM1,495 to RM1,403 and settled the week lower at RM1,427, down RM25 per tonne from a week ago. 

Based on chart CPO futures ended the week negative and are expected to resume their sideways-to-lower trading pattern this week. 

Chart resistance for this week is seen at the RM1,440–RM1,460 levels, and unless the market develops fresh bullish momentum to vault this chart barrier successfully, we may see a re-test of last week’s lows at RM1,400–RM1,405. 

Based on the daily chart, an immediate support stands at the RM1,410–RM1,390 levels. Violation of this immediate chart support could send the market lower to trade at its minor chart support levels at RM1,380–RM1,370. 

The daily technical indicators closed the week mixed and signalled further sideways-to-lower trading this week. 

The daily stochastics triggered the sell signal during early trading last week and remained negative at Friday’s close. The oscillators per cent K and D ended sharply lower at 35.51% and 40.10% respectively. Analysis of the daily stochastics shows the immediate-term market’s direction is still negative. 

The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) gave the cycle-change signal on April 8 and ended the week bearish. The 3- and 7-day ESA-lines closed lower at 1,436 and 1,442 points respectively. Based on the ESA-lines the immediate-term trend of the market is bearish. 

The daily moving-average convergence/divergence (MACD) (not shown in the chart) retained its buy signal at Friday’s close and indicated the market’s near-term trend is still positive. The daily MACD ended above the trigger-line and closed the week lower at minus 21.72 and minus 23.39 points respectively. 

The daily momentum index (MI) slipped below the 100-point mark on April 9 and ended lower at 99.58. Based on the daily MI reading the immediate momentum of the market is bearish. 

Soyoil 

Soyoil futures prices on the Chicago Board of Trade rallied on renewed buying by funds on bullish USDA exports and stocks data and strong advances made by soybean prices, which soared to five-year highs. 

The US Department of Agriculture (USDA) reported that US soybean export sales for the week ending April stood at 704,900 tonnes, sharply above earlier trade estimates. The department also pegged US 2002/03 ending soybean stocks at 145 million bushels, the lowest level in six years. 

The July 2003 soyoil futures prices rose from a week's low of 21.86 to 22.64 US cents and settled Thursday higher at 22.38 US cents, up 0.45 US cent per pound from a week ago. 

Based on chart the July soyoil futures prices closed the week positive and are set to trend higher if they successfully penetrate the three-day-old congestion resistance at the 22.60–22.50 US cents level this week. 

Chart support for this week is seen at the 22.20–22.10 US cents levels. Violation of this immediate chart support would indicate the three-week-old upward momentum has fizzled and send prices lower to the minor support below the 22.00 US cents level. 

The daily technical indicators ended the week neutral and called for some sideways congestion this week. 

The daily stochastics triggered the sell signal on April 8 and remained negative at Thursday’s close. The daily oscillator per cent K ended below the oscillator per cent D and settled the week higher at 85.42% and 88.28% respectively. Based on the daily stochastics the immediate-term market could stay bearish. 

The daily moving-average convergence/divergence (MACD) held on to its bullish signal at Thursday’s close and indicated the main trend is still constructive. The daily MACD closed above the trigger-line and settled higher in the positive zones at 0.39 and 0.33 of a point respectively. 

The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) closed Thursday positive and suggested the main cycle is still positive. The 3- and 7-day ESA-lines ended higher at 22.37 and 22.14 respectively. 

The daily momentum index (MI) remained above the 100-point mark and closed in the positive territory at 105.21. Analysis of the daily MI indicates the market’s immediate momentum is bullish. 

Cocoa 

Cocoa futures prices on the Coffee, Sugar & Cocoa Exchange in New York surged on fresh buying prompted by news of fresh fighting between rebels and the Ivorian army in the remote parts of western Ivory Coast, making new three-week highs. 

The upward move did not last long as selling pressure forced the market to return all of its earlier advances and finally closed Thursday in the minus column. 

The benchmark May 2003 cocoa prices finished Thursday down US$32 at US$1,963 a tonne with trades ranging from US$2,015 to US$1,942 range. 

Based on chart the May 2003 cocoa futures prices closed the week bearish and are expected continue in downtrend this week. Chart support for this week is pegged at the US$1,920–US$1,940 levels, and violation of this immediate chart support could send prices lower to look for a fresh trading base below the US$1,900 level. 

The daily technical indicators closed the week neutral and signalled the market has further downside potential for the immediate term. 

The daily stochastics triggered the sell signal on April 9 and ended Thursday bearish. The daily oscillator per cent K closed below the oscillator per cent D and settled lower at 62.56 and 73.15 % respectively. Analysis of this oscillator indicates the market would stay bearish this week. 

The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) entered a strong negative convergence and indicated a bearish cycle is about to begin. The 3- and 7-day ESA-lines settled the week lower at 1,987 and 1,984 respectively. 

The daily moving-average convergence/divergence (MACD) remained positive at Thursday’s close and indicated the market’s main trend is still positive. The daily MACD and trigger-line closed the week higher in the negative zones at minus 16.43 and minus 22.11 points respectively. 

The daily momentum index (MI) closed above the 100-point mark and settled Thursday at 100.5. Analysis of the daily MI shows the immediate momentum of the market is positive. 

Tin 

Tin prices on the Kuala Lumpur Tin Market made an early attempt to rally last week but failed to expand on the bullish momentum and closed the week slightly lower. Underlying strength of the market remains negative with producers ready to sell on any advances. 

Cash tin prices closed the week lower at US$4,500 per tonne, down US$15 per tonne from a week ago. Trades for the week ranged from US$4,605 to US$4,500 per tonne. 

Volume for the week fell to 179 from 235 tonnes a week ago. 

Based on chart cash tin prices ended the week negative and are expected to come under fresh selling pressure this week. Chart support for this week is unchanged at the US$4,450–US$4,400 per tonne level. Breaching of this chart support would indicate the start of a downward wave. 

Chart resistance for this week stands at the US$4,550–US$4,570 levels. 

The weekly technical indicators ended negative and pointed to further downside trading this week. 

The weekly stochastics remained bearish and indicated the market’s bearish extended-move phase would continue. The weekly oscillators per cent K and D closed lower at 5.67% and 17.89% respectively. 

The weekly moving-average convergence/divergence (MACD) held on to its sell signal at Friday’s close and indicated further weakness in the market this week. The MACD and the trigger-line ended lower in the positive territory at 0.09 and 0.10 of a point respectively. 

The 3- and 7-week exponentially smoothed moving-average price lines (ESA-lines) stayed bearish and indicated a bearish wave could be sustained.  

The 3- and 7-week ESA-lines settled lower at 4,526 and 4,552 respectively. 

The weekly momentum index (MI) held above the 100-point mark but closed lower at 101.35. 

Analysis of the weekly MI shows the market’s momentum is bearish. 

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