CPO to further congest sideways


Forecasting Price Trends: A weekly column by G.M. Teoh on Crude Palm Oil, Soyoil, Cocoa and Cash-Tin.

CPO

The Malaysia Derivatives Exchange (MDEX) crude palm oil (CPO) futures prices turned choppy last week, as negative sentiment linked to good planting progress in the US Midwest soybeans and large purchases of palm oil by India in May could dampen their import activities, encouraged long profit-taking towards late trading. 

Societe Generale de Surveillance (SGS) export estimates for the whole of May at a higher 1.078 million tonnes from 1.012 million tonnes in April limited bullish impact as it fell within traders' expectations. 

The August 2003 futures prices rose from a week's low of RM1,388 to RM1,432 and ended moderately lower at RM1,406, off RM11 per tonne from a week ago. 

Based on chart the CPO futures finished neutral-to-slightly positive and are expected to stay in sideways band trading this week. 

The August futures have an immediate chart support at RM1,380–RM1,385 and breaching of these support levels could turn the immediate chart picture negative and send values lower for a test of the minor chart support at the RM1,350–RM1,360 levels in the near term. 

Chart resistance for this week stands at the RM1,420–RM1,430 levels. Failure to successfully vault this upper trading band would signal the market is in band trading. 

The daily technical indicators ended mixed and called for more sideways congestion this week. 

The daily stochastics turned negative during early trading last week and closed Friday with a strong positive convergence. The oscillators per cent K and D settled the week sharply lower at 57.14% and 62.13% respectively. 

Analysis of the daily stochastics shows the market has the potential for more downside trading. 

The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) remained positive and indicated the upward cycle was intact. The 3- and 7-day ESA-lines closed the week slightly higher at 1,408 and 1,406 points respectively. 

The daily moving-average convergence/divergence (MACD) (not shown in the chart) remained constructive at Friday’s close and indicated the two-week-old upward trend could continue. The daily MACD ended above the trigger-line and closed higher at 0.95 and 0.10 of a point respectively. 

The daily Momentum Index (MI) settled the week above the 100-point mark at 102.20. Analysis of the daily MI shows the market is in a positive phase. 

Soyoil

Soyoil futures prices on the Chicago Board of Trade rebounded from earlier losses and rose in three consecutive sessions to finally settle Thursday with small losses. Technical buying by funds and speculators despite favourable US soybean crop weather and lower soybean export sales helped lift the market from its near three-week lows. 

The August 2003 soyoil futures prices advanced from a week's low of 21.60 to 22.47 US cents and closed Thursday slightly lower at 22.12 US cents, off 0.01 US cent per pound from a week ago. 

Based on chart the July soyoil futures prices ended the week neutral-to-negative and indicated the three-week-old downward cycle had ended. Continuation of the upward momentum this week could take the August futures prices higher for a test of the immediate chart resistance at the 22.40–22.55 US cents levels. 

Chart support for this week is seen at 22.00–21.80 US cents. The immediate chart outlook would turn negative if these levels are violated. 

The daily technical indicators closed mixed and indicated more sideways trading this week. 

The daily stochastics triggered the buy signal on June 4 and remained bullish at Thursday’s close. The daily oscillator per cent K settled above the oscillator per cent D and closed higher at 39.72% and 24.71% respectively. 

The daily moving-average convergence/divergence (MACD) stayed negative at Thursday’s close and signalled the main trend was still negative. The daily MACD ended below the trigger-line and finished higher in the negative zones at minus 0.04 and 0.13 of a point respectively. 

The 3- and 7-day exponentially smoothed moving-average price lines (MAV-lines) held on to their sell signal of May 22 and closed the week with a strong positive convergence, indicating a trend reversal has started. The 3- and 7-day ESA-lines settled lower at 22.04 and 22.10 respectively. 

The daily Momentum Index (MI) edged lower and closed below the 100-point mark at 97.23. Analysis of the daily MI indicates the immediate momentum of the market is still negative. 

Cocoa

Cocoa futures prices on the Coffee, Sugar & Cocoa Exchange in New York experienced wide swings last week. Speculative and switch activities drove the market sharply lower in early trade and was supported by strong short-covering linked to profit-taking which helped the market to regain almost all of its earlier losses and settled Thursday with fractional losses. 

The July 2003 cocoa prices bounced back from a week's low of US$1,420 to US$1,580 and finished Thursday at US$1,501, off US$4 a tonne from a week ago. 

Based on chart the July 2003 cocoa futures prices closed neutral-to-slightly bearish and signalled the market would remain choppy in the coming week. Chart support for this week is seen at the US$1,450–US$1,470 levels. Violation of this immediate chart support would confirm the resumption of the bearish trend and take the market lower for a test its minor support at the US$1,400 level. 

Chart resistance for this week stands at the US$1,560–US$1,580 levels. 

The daily technical indicators closed mixed and signalled more wide range fluctuations this week. 

The daily stochastics triggered the buy signal on June 2 and indicated the upward recovery could continue this week. The daily oscillator per cent K settled above the oscillator per cent D at 61.80 and 56.74 % respectively. 

The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) continue to show that the downward cycle is not over. The 3- and 7-day ESA-lines settled the week lower at 1,517 and 1,538 respectively. 

The daily moving-average convergence/divergence (MACD) remained bearish for the near term and signalled the main trend is bearish. The daily MACD and trigger-line closed the week slightly lower in the negative zones at minus 91.75 and minus 91.03 points respectively. 

The daily Momentum Index (MI) closed below the 100-point and finished Thursday at 88.87. Analysis of the daily MI shows the market is in a bearish phase. 

Tin

Tin prices on the Kuala Lumpur Tin Market advanced to fresh rally highs early last week but changed direction on higher offerings before closing the week with minor losses. 

Cash tin prices closed the week slightly lower at US$4,735 per tonne, off US$15 per tonne from previously. Trades for the week ranged widely from US$4,830 to US$4,735 per tonne. 

Volume for the week increased to 225 from 112 tonnes a week ago. 

Based on chart cash tin prices ended negative and signalled the downward pressure could carry over into this week’s trading. Chart support for this week stands at the US$4,720–US$4,700 per tonne level. Violation of this support would indicate the continuation of the downward trend and likely send prices lower to the minor support levels at US$4,650–US$4,630. 

Chart resistance is lowered to US$4,760–US$4,780. 

The weekly technical indicators ended bearish and signalled the market would trend lower this week. 

The weekly stochastics retained their sell signal at Friday’s close and pointed to more downward pressure this week. The weekly oscillators per cent K and D ended lower at 72.73% and 85.45%. 

The weekly moving-average convergence/divergence (MACD) stayed positive and signalled the main trend was still positive. The MACD and trigger-line closed the week in the positive territory at 0.103 and 0.101 of a point respectively. 

The 3- and 7-week exponentially smoothed moving-average price lines (ESA-lines) signalled the start of a bearish cycle. The 3- and 7-week ESA-lines ended lower at 4,765 and 4,761 respectively. 

The weekly Momentum Index (MI) ended above the 100-point mark and closed slightly higher in the positive territory at 104.41. Analysis of the weekly MI shows the market is not out of its constructive phase. 

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