CPO futures likely to trend higher


  • Business
  • Monday, 01 Sep 2003

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 futures prices trended sideways during early trading last week and advanced on renewed buying to finally close the week at its highest levels in four weeks.  

News that India’s new regulations on palm oil imports caused some disruption to deliveries on almost 230,000 tonnes of palm oil had very little negative impact on trading. Traders expect the uncertainty surrounding this new ruling to clear up by this week.  

The November 2003 futures prices trended upwards from a weekly-low of RM1,303-RM1,343 and settled the week higher at RM1,343, up RM24 per tonne from previously.  

Chart-wise, the November futures settled the week bullish and indicated that the bullish wave that started four weeks ago is intact. 

The November futures prices immediate support for this week is seen at the RM1,330-RM1,335 level. For the upward momentum to successfully continue this week, this level must not be violated. Overhead resistance for this week is adjusted higher to the RM1,345-RM1,350 level. Penetration of this chart-resistance could propel the market higher to its next upside-target at the RM1,365-RM1,380 level.  

The daily technical indicators ended the week bullish and signalled the four-week old upward cycle is not over.  

The daily stochastics triggered the buy-signal on Aug 27 and signalled that the market is in a bullish extended-move phase. The oscillator per cent K and D ended the week positive at 93.20% and 88.13% respectively. Analysis of the daily oscillator indicates that the upward cycle could extend this week.  

The 3-day and 7-day exponentially smoothed moving-average price-line (ESA-line) closed the week with its buy-signal of Aug 18 intact and called for further advances this week. The 3-day and 7-day ESA-lines closed the week higher at 1,333 and 1,322 points respectively.  

The daily moving-average convergence/divergence (MACD) (not shown in the chart) ended the week bullish and called for the continuation of the upward wave this week. The daily MACD ended above the trigger-line and ended sharply higher at minus 0.01 point and minus 2.53 points respectively.  

The daily momentum index (MI) remained above the 100-point mark and ended slightly lower at 101.43 points. Analysis of the daily MI indicates that the market’s immediate momentum is slightly negative.  

Soyoil

Soyoil futures prices at the Chicago Board of Trade (CBOT) closed Thursday higher after having made numerous rally attempts. Commodity funds buying and short-covering activities lifted values to its two-week highs during Thursday’s close.  

The December-oil rose from a weekly-low of 19.80 US cents to 20.37 US cents and finally closed higher at 20.33 US cents per lb, up 0.36 US cent per lb from a week ago. 

Chart-wise, the December soyoil futures prices closed the week bullish and look set to resume its upward momentum and trend higher this week.  

Immediate chart-support for this week is seen higher at the 20.20-20.15 level. Overhead chart resistance for this week is seen at the 20.40-20.50 US cents level. Penetration of this level could set off fresh bullish momentum and cause prices to surge and trade above the 20.90-20.80 US cents per lb level.  

The daily technical indicators closed the week bullish and called for more upward trading this week.  

The daily stochastics triggered the buy-signal on Aug 28 and indicated that the immediate trend is constructive. The daily oscillator per cent K ended above the oscillator per cent D and closed the week sharply lower at 49.09% and 33.25% respectively.  

The daily moving-average convergence/divergence (MACD) closed the week with its buy-signal of Aug 11 intact and signalled that the market’s near-term trend is bullish. The daily MACD closed above the trigger-line and settled higher in the negative territory at minus 0.09 and minus 0.13 point respectively. 

The 3-day and 7-day exponentially smoothed prices lines (ESA) closed with a strong positive divergence and indicated that the upward cycle could continue. The 3-day and 7-day ESA-lines finished the week higher at 20.14 and 20.00 respectively.  

The daily momentum index (MI) ended softer and closed above the 100-point mark at 101.80 points. Analysis of the daily MI indicates that the immediate term trend is still positive.  

Cocoa

Cocoa futures prices on the Coffee, Sugar & Cocoa Exchange (CSCE) in New York surged to a fresh 3½-month high on renewed fund and speculative buying motivated by fears of lower crop prospects from the world’s top producer Ivory Coast. Market consensus is that the weather conditions in Ivory Coast are less than ideal and recent dry weather had increased stress on the crop there.  

The benchmark December 2003 futures prices advanced from a weekly-low of US$1,603 to US$1,765 and ended Thursday sharply higher at US$1,753, up a hefty US$137 a tonne from previously.  

Chart-wise, the December 2003 cocoa futures closed the week bullish and are expected to stay bullish for this week. Chart-support for this week is adjusted sharply higher to the US$1,730-US$1,720 level and is not expected to be tested if the bullish underlying sentiment of the market continues this week. Chart-resistance for the immediate term is pegged at the US$1,760- US$1,780 level and a successful push above these levels could take the market higher to its next upside-target at the US$1,800- US$1,840 per tonne level.  

The daily technical indicators settled the week slightly bullish and signalled more upside trading this week.  

The daily stochastics closed the week with a positive convergence and signalled that the market could enter into a bullish extended-move phase this week. The daily oscillator per cent K closed below the oscillator per cent D and ended slightly higher at 85.22% and 87.45% respectively.  

The 3-day and 7-day exponentially smoothed average price-line (ESA-line) retained its bullish signal and indicated that the bullish trend could continue. The 3-day and 7-day ESA-lines closed the week higher at 1,723 and 1,663 respectively.  

The daily moving-average convergence/divergence (MACD) closed the week bullish and called for the continuation of the bullish trend this week. The daily MACD and trigger-line closed the week higher at 51.18 and minus 42.31 points respectively.  

The daily momentum index (MI) remained above the 100-point on Thursday and closed higher at 113.68 points. The daily MI shows that the market is in a bullish phase.  

Tin prices on the Kuala Lumpur Tin Market (KLTM) congested in very tight trading range last week and closed with fractional losses. Lack of aggressive sellers and persistent commercial interest kept prices in a consolidated pattern.  

The cash tin prices closed the week slightly lower at US$4,841 per tonne, off US$5 per tonne from a week ago. Trading range for the week remained narrow from US$4,846 to US$4,836 per tonne.  

Total volume for the week dropped to 223 tonnes from 327 tonnes previously. 

Chart-wise, cash tin prices ended the week constructive and are expected to hold steady with a slight upward bias in the coming four-day trading week. Chart-support for this week is revised slightly higher to the US$4,810- US$4,820 per tonne level. Violation of this support could result in a mild downward correction. Chart resistance for this week remains unchanged from a week ago at the US$4,870-US$4,900 levels.  

The weekly technical indicators ended the week mostly negative and indicated the prospect of a lower trading range this week.  

The weekly stochastics closed the week bearish and called for a downward correction this week. The weekly oscillator per cent K and D closed the week lower at 76.12% and 82.85%.  

The weekly moving-average convergence/divergence (MACD) ended the week bearish and indicated a lower trading level this week. The MACD and the trigger-line ended the week in positive territory at 0.083 and 0.084 point respectively.  

The 3-week and 7-week exponentially smoothed average price-lines (ESA-lines) stayed positive during Friday’s close and indicated that the upward cycle is not over. The 3-week and 7-week ESA-lines finished the week higher at 4,836 and 4,814 respectively.  

The weekly momentum index stayed above the 100-point mark on Friday and ended lower at 102.27 points. Analysis of the weekly MI shows that the immediate momentum of the market is bearish. 

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