CPO to remain in sideways trading


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

THE Bursa Malaysia Derivatives crude palm oil (CPO) futures prices fell after having failed in an early rally attempt and closed the week moderately lower. The weaker Chicago Board of Trade (CBOT) soyoil futures prices and the lower palm oil exports estimate for the first 25 days of November dampened sentiment. 

Societe Generale de Surveillance (SGS) estimated exports of palm oil for those 25 days at 1,024,771, 7.8% lower than the 1,024,771 tonnes in the same period in October. 

The February 2005 CPO futures prices dipped from the week’s high at RM1,478 and made the week’s low of RM1,428 before ending Friday at RM1,442, down RM27 per tonne from a week ago.  

Total volume for the week surged to 23,053 contracts from 15,954 a week ago. Open interest as at Thursday close declined marginally to 31,472 contracts from 32,443 previously. 

The daily candlestick chart ended the week neutral to slightly negative and signalled that the immediate-term trend would stay in sideways band trading. 

CPO

The February 2005 futures immediate chart-support is seen for this week at the RM1,440-RM1,430 level and violation of this support would turn the immediate chart picture negative. Chart resistance remains at the RM1,450-RM1,455 level. Minor resistance stands at the RM1,470-RM1,475 level.  

The daily technical indicators settled the week negative and indicated that the immediate momentum is still slightly bearish.  

The daily stochastic triggered the sell signal on Nov 23 and indicated that the downward cycle is not completed. The oscillator per cent K ended below the oscillator per cent D and settled the week sharply lower at 20.28% and 43.89% respectively.  

The 3-day and 7-day exponentially smoothed moving average price lines (ESA lines) triggered the short-term sell signal on Nov 25 and indicated that a bearish cycle has started. The 3-day and 7-day ESA lines ended the week lower at 1,444 and 1,446 points, respectively. 

The daily moving average convergence/ divergence (MACD) (not shown in the chart) triggered the short-term sell signal on Nov 25 and remained bearish on Friday’s close. The daily MACD settled the week below the trigger line and ended higher at 7.09 points and 7.54 points, respectively.  

The 9-day Relative Strength Index (RSI) declined from the week’s high of 68.25 points on Nov 23 and ended sharply lower near the neutral zone at 51.07 points. Analysis of the daily RSI indicates that the immediate underlying strength of the market is bearish.  

Soyoil

 

THE Chicago Board of Trade (CBOT) soyoil futures prices started the week stronger as funds covered short positions on concerns about the spread of soybean rust in to other soybean states in the United States. 

Last Monday, the US government confirmed that the yield cutting soy rust disease was found in Arkansas, the sixth state where the rust has been found. With the US 2004 soybean harvest almost completed, traders are worried that the rust will spread into the main growing areas of the Midwest next summer and reduce the 2005 production. 

The January 2005 soyoil futures prices dropped from the week’s high of 21.98 US cents to 21.10 US cents and ended the week sharply lower at 21.18 US cents, off 0.49 US cents per pound from a week ago. 

The daily candlestick chart ended the week bearish and signalled that the immediate term trend would remain weak this week. A big black candle occurred on Wednesday and this is a bearish signal as prices closed significantly lower than they opened. 

The daily candlestick chart shows an immediate chart support at the 21.00-20.80 US cents level. The immediate term trend would likely stay bearish if this level is violated. Chart resistance for this week is revised lower to the 21.30-21.45 US cents level.  

The daily technical indicators remained mixed on Wednesday’s close and signalled that the market would adjust lower this week.  

The daily stochastic triggered the sell signal of Nov 23 and confirmed that the immediate cycle is bearish. The daily oscillator per cent K ended below the oscillator per cent D and settled the week sharply lower at 55.23% and 71.89% respectively.  

The daily MACD ended with a strong negative convergence signal and indicated that a downward cycle is about to begin. The MACD closed the week above the trigger-line and ended higher in the positive territory at 0.12 point and 0.11 point, respectively. 

The 3-day and 7-day ESA lines triggered the sell signal on Nov 24 and showed that a downward wave had begun. The 3-day and 7-day ESA-lines ended the week lower at 21.47 and 21.48, respectively.  

The 9-day RSI declined from a weekly high of 63.71 points on Nov 22 and closed the week lower at 47.64 points. Analysis of the daily RSI shows that the immediate underlying strength of the market would remain bearish in the short-term.  

Cocoa

COCOA futures prices on the New York Board of Trade in New York fell to fresh lows in early trading last week and recovered towards late trading from short covering profit-taking buying ahead of the long Thanksgiving weekend. 

The March 2005 cocoa futures prices ranged from the week’s high of US$1,605 to US$1,551 and ended the week fractionally higher at US$1,600, up US$3 a tonne from a week ago.  

The candlestick chart ended the week bullish and indicated that the market would stay firm this week. Two positive hammer candles occurred last week. This is a bullish signal and suggests that the upward momentum would continue this week.  

Chart resistance for this week is seen at the US$1,615-US$1,630 level. A successful push above this level would set the market on a fresh bullish course. Chart support for this week stands at the US$1,590-US$1,570 level.  

The daily technical indicators closed the week mixed and called for a steadier trend this week. 

The daily stochastic triggered the buy signal on Nov 22 and settled the week on a constructive note. The daily oscillator per cent K closed above the oscillator per cent D and settled sharply higher at 23.34% and 13.97% respectively. Analysis of the stochastic showed that the market had reached its oversold levels. 

The 3-day and 7-day ESA lines showed that the downward wave was about to end. The 3-day and 7-day ESA lines settled the week sharply lower at 1,595 and 1,615 respectively.  

The daily MACD remained bearish for the near-term trend. The daily MACD and trigger line ended the week sharply lower in the positive territory at 26.88 and 32.07 points, respectively. 

The 9-day Relative Strength Index (RSI) rebounded from the week’s low of 40.64 points on Nov 22 and closed slightly higher in the negative territory at 48.16 points. Analysis of the RSI shows that the immediate underlying strength of the market is neutral to slightly positive.  

Tin

 

TIN prices on the Kuala Lumpur Tin Market (KLTM) trended lower on light selling pressure last week and finally closed with moderate losses.  

The cash tin prices closed the week lower at US$8,949 per tonne, off US$111. Trade for the week ranged from US$9,000 to US$8,949 per tonne.  

Total trading volume for the week dipped to 405 tonnes from 693 a week ago.  

The daily candlestick chart ended the week negative and indicated that the downward momentum would sustain this week.  

Chart support for this week is adjusted lower to the US$8,920-US$8,880 per tonne level. Chart resistance for this week is revised lower to the US$9,000-US$9,030 level. 

The weekly indicators closed the week bearish and signalled that the immediate term would stay negative.  

The weekly stochastic triggered the sell signal last week and points to more downside trading this week. The weekly oscillator per cent K and D settled the week lower at 63.13% and 70.08% respectively.  

The weekly MACD closed the week bearish for the near-term trend. The MACD and trigger line ended the week slightly lower in positive territory at 0.14 and 0.15, respectively.  

The 3-week and 7-week ESA lines gave the sell signal last Friday and shows that a downward cycle has started. The 3-week and 7-week ESA lines ended the week lower at 8,991 and 8,993 points, respectively. 

The 9-week RSI closed the week lower in the negative territory at 49.26 points and indicated that the immediate underlying strength of the market was bearish.

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