CPO to remain in congested trading


  • Business
  • Monday, 20 Dec 2004

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 trended lower for most of the sessions last week, dampened by light speculative and long-liquidation selling and closed on Friday with minor losses. 

Negative sentiment linked to lower palm oil exports for the first half of December and ideas that palm oil stocks are rising faster than exports, encouraged some bullish players to unwind positions.  

Societe Generale de Surveillance (SGS) estimated the Malaysian palm oil exports was 23.5% lower for the first 15 days of December at 472,556 tonnes from 618,071 tonnes in the same period in November. 

The March 2005 CPO futures prices fluctuated from the week’s high of RM1,418 to RM1,384 and settled Friday lower at RM1,384, off RM17 per tonne from a week ago.  

Total volume for the week fell sharply to 20,582 contracts from 28,987 a week ago. Open interest as at Thursday's close was lower at 30,438 contracts against 32,508 a week ago. 

CPO

The daily candlestick chart settled the week neutral to slightly negative and signalled that the market may continue to range-trade in a narrow band. 

The March 2005 futures immediate chart support for this week stands at the RM1,380-RM1,370 level. Violation of this support would likely trigger off fresh selling and set the course for further downward trading. Chart resistance for this week is seen at the RM1,400-RM1,415 level.  

The daily technical indicators ended the week mostly negative and points to more sideways trading this week.  

The daily stochastic triggered the short-term sell signal last week and ended Friday negative. The oscillator per cent K closed below the oscillator per cent D and finished the week higher at 32.92% and 38.69% respectively.  

The 3-day and 7-day exponentially smoothed moving average price lines (ESA lines) remained bearish and indicated that the immediate term cycle is still negative. The 3-day and 7-day ESA lines closed the week lower at 1,401 and 1,403 points respectively. 

The daily moving average convergence/divergence (MACD) (not shown in the chart) stayed bearish on Friday’s close and indicated that the market is not totally out of its bearish phase. The MACD settled the week below the trigger line and ended in the negative territory at minus 7.75 points and minus 7.58 points respectively.  

The 9-day Relative Strength Index (RSI) recovered from the week’s low of 34.10 points on Dec 15 and closed higher in the negative zone at 41.80 points. Analysis of the daily RSI shows that the immediate underlying strength of the market is slightly positive.  

 

Soyoil

THE Chicago Board of Trade (CBOT) soyoil futures prices rose strongly in early trade last week supported by short covering and then retreated toward late trading to finally close on Thursday with moderate gains.  

Commodity funds were active buyers during the early rally, motivated by talk that the Asian soy rust was spreading rapidly into Brazil and Argentina. The yield-reducing disease spread to Sao Paulo, the sixth Brazilian state hit by the disease this year. Argentina also recorded two cases soy rust in its north-eastern part of the country.  

The January 2005 soyoil futures prices advanced from the week’s low of 19.97 US cents to 20.50 US cents and closed the week higher at 20.47 US cents, up 0.54 US cents per pound from previously. 

The daily candlestick chart settled the week positive and indicated that the market may continue to trend sideways to higher this week.  

The daily chart indicates an immediate chart support for this week at the 20.30-20.25 US cents level. Overall trend may stay constructive if this level is not violated. Chart resistance is revised higher to the 20.60-20.70 US cents level.  

The daily technical indicators concluded the week bullish and signalled that the technical underlying strength of the market is strong.  

The daily stochastic triggered the short-term buy signal early last week and managed to remain positive during Thursday’s close. The daily oscillator per cent K ended above the oscillator percent D and settled the week sharply higher at 87.17% and 71.67% respectively. Analysis of the stochastic shows that the newly developed upward momentum is sustainable.  

The daily MACD indicated a trend change on Dec 14 and ended the week positive. The MACD settled the week above the trigger line and closed higher in the negative territory at minus 0.22 point and 0.25 point, respectively. 

The 3-day and 7-day ESA lines indicated a trend-reversal on Dec 14. The 3-day and 7-day ESA lines finished the week sharply higher at 20.34 and 20.25, respectively. Based on this oscillator, the immediate term trend is expected to remain bullish.  

The 9-day RSI recovered from the week’s low of 40.22 points on Dec 13 and ended the week sharply higher at 51.98 points. Analysis of the daily RSI shows that the immediate underlying strength of the market is bullish.  

Cocoa

COCOA futures prices on the New York Board of Trade in New York rebounded sharply and reversed a six-session losing streak before closing on Thursday with sharp gains.  

Big fund and speculative buying was met with limited selling and hedging from producers that allowed the market to regain a large portion of its earlier losses. Late selling on Thursday triggered by the weakening of the sterling against the US dollar prompted many who were long to realise their profits.  

The March 2005 cocoa futures prices jumped from the week’s low of US$1,590 to US$1,680 and eased slightly to close the week sharply higher at US$1,680, up US$90 a tonne from a week ago.  

The candlestick chart ended the week bullish and signalled that the upward thrust would continue this week. A big white candle occurred last Wednesday and the fact that it took place when prices penetrated its downtrend channel resistance line shows that the bullish momentum would continue. 

Chart resistance for this week is seen higher at the US$1,670-US$1,680 level. A push above this hurdle would likely trigger off fresh buying interest and take the market to higher levels. 

The daily technical indicators closed the week mostly bullish and suggested that the upward cycle would continue this week. 

The daily stochastic triggered the short-term buy signal on Dec 14 and stayed bullish on Thursday’s close. The daily oscillator per cent K settled above the oscillator per cent D and finished sharply higher at 59.12% and 34.93% respectively. 

 

The 3-day and 7-day ESA lines triggered the buy signal on Dec 15 and signalled that the market was in a positive phase. The 3-day and 7-day ESA lines ended the week slightly lower at 1,646 and 1,642 respectively.  

The daily moving average convergence/divergence (MACD) ended the week with a strong positive convergence and indicated that a main trend change is about to occur. The daily MACD and trigger line finished the week lower in the positive territory at 13.68 and 14.43 points respectively. 

The 9-day RSI ended high in the positive territory at 53.40 points. Analysis of the RSI indicates that the immediate underlying strength of the market neutral to slightly bullish.  

Tin

TIN prices on the Kuala Lumpur Tin Market (KLTM) adjusted higher on a technical bounce last week and closed on Friday with moderate gains. The lack of producers selling and renewed buying interest allowed the market to regain a large portion of its previous weeks’ excessive losses. 

The cash tin prices ended the week moderately higher at US$8,770, up US$105 from previously. Trade for the week ranged from US$8,820 to US$8,675 per tonne.  

Total trading volume for the week stood at 273 tonnes compared with 295 tonnes a week ago.  

The daily candlestick chart closed the week neutral to slightly positive and indicated that the recovery momentum would continue.  

Chart support for this week is seen at the US$8,750-US$8,730 per tonne level. Chart resistance for this week is revised higher to the US$8,790-US$8,810 level. 

All the weekly indicators remained negative during Friday’s close and indicated that the market is not completely out of its bearish cycle.  

The weekly stochastic remained bearish during Friday’s close. The weekly oscillator per cent K and D settled the week higher in the bearish extended move zones at 8.83% and 16.76% respectively.  

The weekly MACD indicated that the main trend is still bearish. The MACD and trigger line closed the week slightly lower in positive territory at 0.07 point and 0.09 point respectively.  

The 3-week and 7-week ESA lines indicated that the immediate term trend is bearish. The 3-week and 7-week ESA lines closed the week lower at 8,782 and 8,885 points respectively. 

The 9-week RSI settled the week higher in the negative territory at 41.47 points and indicated that the immediate underlying strength of the market is neutral to bearish. 

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