Trade in CPO to remain choppy


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 (CPO) prices extended on their bearish momentum in early trading last week and then rebounded on a strong technical correction, boosted by sharp advances in soyoil prices on the Chicago Board of Trade and positive reaction to the Malaysian Palm Oil Board's August data. 

The December 2003 CPO futures prices jumped from a week's low of RM1,282 to RM1,330 and settled the week sharply higher at RM1,330, up RM30 per tonne from previously. 

Based on chart the December futures closed positive and indicated the upward wave could continue this week. 

The December futures has an immediate chart support at the RM1,320–RM1,310 levels.  

Chart resistance is revised higher to the RM1,340 to RM1,345 levels. A successful push above this hurdle would signal the start of an upward breakout and turn the immediate chart picture bullish. The daily technical indicators ended bullish and signalled the upward momentum could be sustained. 

The daily stochastics triggered the buy signal on Sept 9 and stayed bullish at Friday’s close. The oscillators per cent K and D ended bullish at 92.79% and 60.88% respectively. 

The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) triggered the buy signal on Sept 11 and confirmed an upward cycle has started. The 3- and 7-day ESA-lines finished bullish at 1,317 and 1,310 points respectively. 

The daily moving-average convergence/divergence (MACD) (not shown in the chart) triggered the buy signal on Sept 11 and signalled the start of an upward trend. The daily MACD settled above the trigger-line and ended higher at 0.83 of a point and minus 1.97 points respectively. 

The daily momentum index (MI) penetrated the 100-point mark last week and ended higher at 102.86. Analysis of the daily MI indicates the market has entered a positive phase. 

Soyoil

THE Chicago Board of Trade soyoil futures prices set contract highs in reaction to the sharply lower USDA 2003 US soy crop estimate following the hot and dry summer conditions. In its latest monthly crop report, USDA forecast a sharply lower US 2003 soybean crop of 2.643 billion bushels, making it the smallest crop in seven years if the figures turn out to be correct. 

The December-oil rose from a week's low of 20.42 to 21.78 US cents and closed sharply higher at 21.73 US cents per lb, up 1.06 US cents from a week ago. 

Based on chart the December soyoil futures prices closed the week technically bullish. Thursday’s close at life-of-contract highs shows the market is technically strong and a continuation of the upward momentum this week could trigger fresh buying interests and set the market on a bullish course. 

Chart support for this week stands at the 21.60–21.50 US cents levels. Continuation of the upward momentum this week should take the market higher to test its next upside breakout target at the 21.85–22.00 US cents levels. 

The daily technical indicators closed bullish and signalled the recently developed bullish momentum could continue. 

The daily stochastics triggered the buy signal on Sept 10 and indicated an upward cycle has started. The daily oscillator per cent K closed above the oscillator per cent D and finished the week lower at 61% and 40.04% respectively. 

The daily moving-average convergence/divergence (MACD) stayed bullish at Thursday’s close and signalled the main trend could remain positive. The daily MACD closed above the trigger-line and settled higher in the positive territory at 0.23 and 0.19 of a point respectively. 

The 3- and 7-day exponentially smoothed moving-average prices lines (ESA) expanded on the positive divergence and signalled the upward wave could be sustained. The 3- and 7-day ESA-lines settled higher at 21.21 and 20.91 respectively. 

The daily momentum index (MI) stayed above the 100-point mark at 104.22. Analysis of the daily MI shows the market is in a bullish phase. 

COCOA futures prices on the Coffee, Sugar & Cocoa Exchange in New York ended four straight days of losses last week and sank to a three-week low as speculators and commodity funds unwound long losing positions as pressure from origin selling intensified. 

Bearish sentiment was supported by reports of rainfall the last couple of days in the Ivory Coast where the crop could improve after having affected by a dry spell earlier. 

The benchmark December 2003 futures prices dropped from a week's high of US$1,706 to US$1,522 and settled Thursday sharply lower near its week's low at US$1,528, off US$172 a tonne from a week ago. 

Based on chart the December 2003 cocoa futures closed bearish and are expected to continue in a downward trend this week. Chart support for this week is lowered to the US$1,500–US$1,480 levels. Breaking of this downtrend support level could trigger fresh selling and pressure the market below the US$1,450 level. Chart resistance is adjusted lower to US$1,540 to US$1,570. 

The daily technical indicators ended the week bearish and signalled the downward trend could be extended. 

The daily stochastics triggered the sell signal on Sept 9 and showed the market is in a bearish extended-move phase. The daily oscillator per cent K closed below the oscillator per cent D and ended sharply lower at 8.79% and 25.02 % respectively. 

The 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines) flashed the bearish crossover signal on Sept 9 and ended the week with its sell signal intact. The 3- and 7-day ESA-lines settled lower at 1,608 and 1,637 respectively. Based on the ESA-lines the market could remain south this week. 

The daily moving-average convergence/divergence (MACD) expanded on its sell signal and indicated the main trend is bearish. The daily MACD and trigger-line finished lower at 29.76 and minus 38.83 points respectively. 

The daily momentum index (MI) slipped below the 100-point mark last week and closed lower in the negative territory at 91.60. The daily MI shows the market could continue to trend lower. 

TIN prices on the Kuala Lumpur Tin Market stayed congested and moved in a tight range and finally closed Friday with small gains. Lack of fresh leads from the London Metal Exchange and moderate commercial buying kept prices above the US$4,800 per tonne level all week. 

Cash tin prices finished the week slightly higher at US$4,850, up US$10 per tonne from a week ago. Trades ranged narrowly from US$4,860 to US$4,820 per tonne. Volume rose to 289 from 290 tonnes a week ago. 

Based on chart cash tin prices have ended the week constructive and are expected to retain their sideways band trading this week. Chart support is unchanged at the US$4,810–US$4,830 levels, and the market could hold steady to higher if these levels are not violated. Chart resistance is also unchanged at US$4,870–US$4,900. 

The weekly technical indicators ended negative and indicated the market could stay sideways-to-lower this week. 

The weekly stochastics triggered the sell signal at Friday’s close and called for a lower trading band this week.  

The weekly oscillators per cent K and D settled higher at 77.88% and 78.15%. 

The weekly moving-average convergence/divergence (MACD) retained its bearish signal at Friday’s close and indicated that fresh selling pressure could emerge. The MACD and the trigger-line settled in the positive territory at 0.080 and 0.081 of a point respectively. 

The 3- and 7-week exponentially smoothed moving-average price lines (ESA-lines) maintained their positive divergence at Friday’s close and indicated the upward cycle is intact. The 3- and 7-week ESA-lines settled higher at 4,844 and 4,828 respectively. 

The weekly momentum index (MI) settled above the 100-point mark at 100.81.  

Analysis of the weekly MI shows that the market is still in a positive phase. 

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