Forecasting Price Trends: A weekly column by G.M. Teoh on Crude Palm Oil, Soyoil, Cocoa and Cash Tin
CRUDE palm oil futures prices on the Bursa Malaysia Derivatives surged upwards last week in line with the sharp advanced in the Chicago Board of Trade (CBOT) soyoil futures prices and closed with moderate gains.
Concerns about slow palm oil exports and a sluggish physical market had little impact as many traders preferred to cover their shorts last week.
Comments by US President George Bush urging lawmakers to pass an energy bill that would increase the usage of soy diesel and ethanol and the drier weather in the US Midwest soybean growing region helped fuel the rally in the soybean complex markets.
Malaysian exports of palm oil products for June 1 to 15 dropped 9.6% to 669,259 tonnes from 740,058 tonnes in the same period in May, cargo surveyor Societe Genarale de Surveillance said.
A slight delay in India’s monsoon rains in major oilseeds, cotton and grain producing areas aided the bullish sentiment. Indian production of oilseeds and grains would be hampered if monsoon rains do not reach states like Mahashtra and Madhya Pradesh within a week. In Madhya Pradesh, sowing of soybean has been delayed by more than a week, as rains were 51% lower than normal during the June 1-8 period.
The September 2005 crude palm oil future prices advanced from a weekly low of RM1,364 to RM1,410 and ended the week near its intra-week’s high at RM1,409 per tonne, up RM36 from previously.
Total volume for the week rose to 26,347 contracts from 15,959 a week ago. Open interest as at Thursday’s close was higher at 27,659 contracts from 26,431 a week ago.
The daily candlestick chart closed the week constructive and signalled that the newly established upward momentum would sustain.
Immediate chart support for the September futures is seen at the RM1,395-RM1,380 level. Chart resistance for this week stands at the RM1,410-RM1,425 level.
The daily technical indicators ended the week bullish and indicated that technical strength of the market is still positive.
The daily stochastic triggered the short-term buy signal on June 13 and remained positive during Friday’s close. The oscillator per cent K ended above the oscillator per cent D and settled the week sharply higher in the bullish extended move zone at 86.11% and 68.69% respectively.
The 3-day and 7-day exponentially smoothed moving average price lines (ESA lines) ended with the bullish divergence intact on Friday’s close and indicated that the upward cycle would continue. The 3-day and 7-day ESA lines finished the week higher at 1,398 and 1,390 points respectively.
The daily moving average convergence/ divergence (MACD) (not shown in chart) turned bullish for the near-term trend on June 16 and signalled that an upward cycle had started. The daily MACD ended above the trigger line and settled higher in the negative territory at minus 5.31 points and minus 7.38 points respectively.
The 9-day RSI advanced from a weekly low of 42.02 points on June 13 and finished the week higher in the positive zones at 55.68 points. Analysis of the RSI indicates that the immediate underlying strength of the market is still positive.
THE Chicago Board of Trade (CBOT) soyoil futures prices soared last week inline with the bullish soybean prices and ended sharply higher. Crop concerns amid fear about soy rust disease and some extended forecasts for warm, dry weather in the US Midwest soybean growing area triggered off a mini rally.
Traders think that any drastic changes in the weather pattern in the Midwest will worsen the situation in central Illinois where rainfall has been 5 to 6 inches below normal. Generally, the market is not expecting a lot of rainfall for the next week and temperatures are expected to stay higher. This change in weather outlook had encouraged many who were short to cover positions.
The United States Department of Agriculture (USDA) rated 64% the US soybean crop good-to-excellent condition, up from 62% a week ago.
The August 2005 soyoil futures prices surged from an intra-week low of 22.97 US cents to 24.63 US cents and closed Thursday sharply higher at 24.18 US cents, up 1.35 cents per pound from previously.
The daily candlestick chart finished the week slightly negative and signalled that the market is losing bullish momentum after the sharp advances last week.
Chart resistance for this week is seen at the 24.25-24.35 US cents level. Chart support is adjusted higher to the 23.95-23.80 US cents level and violation of this support would set off a mild downward correction.
The daily technical indicators ended the week positive and signalled that the main trend would expand.
The daily stochastic ended the week with its short-term buy signal of June 7 intact and indicated that the market is in an extended move. The daily oscillators per cent K and D settled sharply higher at 84.63% and 67.85% respectively.
The daily moving average convergence/ divergence (MACD) turned positive for the near-term trend on June 14 and remained bullish on Thursday’s close. The MACD ended the week above the trigger line and closed higher in the positive zone at 0.23 and 0.13 point respectively.
The 3-day and 7-day exponentially smoothed price lines (ESA lines) gave the buy signal on June 14 and closed with the positive divergence intact. The 3-day and 7-day ESA lines settled the week higher at 23.96 points and 23.62 points respectively.
The 9-day Relative Strength Index (RSI) dipped from a weekly high of 70.92 points on June 15 and closed the week higher at 67.37 points. Analysis of the RSI indicates that the immediate underlying strength of the market is neutral to slightly negative.
COCOA futures prices on the New York Board of Trade in New York advanced 5% last Tuesday and extended on the bullish rally to end Thursday at their best levels in two months. Funds and speculators chased the market higher following renewed uncertainties in Ivory Coast where rebels think President Laurent Gbagbo was ready to launch an attack on their strongholds in the north.
Early sharp advances caused the market to surge as prices broke through key technical barriers, forcing speculators to buy and covered short positions in a market that has been dormant for almost a week.
The September 2005 cocoa futures prices was lifted from a weekly low of US$1,397 to US$1,562 and settled Thursday sharply higher at US$1,541, up a hefty US$144 from a week ago.
The daily candlestick chart ended the week bullish and signalled that the upward trading would continue this week.
Chart support for the September futures is now seen at the US$1,520-US$1,510 level. Overall chart outlook would remain bullish if this level is not breached this week. Chart resistance is revised higher to the US$1,560-US$1,570 level.
The daily technical indicators ended the week mixed and indicated that the market would remain in range-bound trading.
The daily stochastic triggered the short-term buy signal on June 13 and stayed bullish during Thursday’s close. The daily oscillator per cent K closed above the oscillator per cent D and finished the week sharply higher at 03.80 and 78.38 % respectively.
The 3-day and 7-day exponentially smoothed average price lines (ESA lines) triggered the bullish cycle-change signal on June 13 and remained positive on Thursday’s close. The 3-day and 7-day ESA lines settled the week higher at 1,522 and 1,484 points respectively.
The daily moving average convergence/ divergence (MACD) turned bullish for the immediate trend last week. The daily MACD and trigger line ended the week higher at 4.49 and minus 12.61 points respectively.
The 9-day Relative Strength Index (RSI) eased from a weekly high of 76.81 points on June 15 and ended the week sharply higher at 76.81 points. The daily RSI indicates that the immediate underlying strength of the market is still constructive.
TIN prices on the Kuala Lumpur Tin Market (KLTM) trended in a very narrow band last week and settled at their worst levels since mid-January 2005. Lack of fresh leads from the London Metal Exchange (LME) tin prices kept traders on the sidelines.
The cash tin prices closed the week lower at US$7,645, up US$5 from a week ago. Trade for the week moved from US$7,675 to US$7,645 per tonne.
Total volume for the week declined to 335 tonnes from 452 tonnes previously.
The weekly candlestick chart stayed bearish for the immediate term trend and signalled for the prospects of more downward trading.
Chart support for this week stands at the US$7,630-US$7,600 per tonne level. Chart resistance for this week is adjusted lower from a week ago to the US$7,665-US$7,685 level.
The weekly technical indicators closed the week bearish and signalled that the bearish cycle would continue.
The weekly stochastic closed the week deep in the bearish extended move zone and failed to give any indication of a trend reversal. The weekly oscillators per cent K and D closed the week lower at 0.40% and 5.24% respectively.
The weekly moving average convergence/ divergence (MACD) ended the week bearish and points to further downward trading this week. The weekly MACD and trigger line settled the week lower in negative territory at minus 0.15 and minus 0.12 point respectively.
The 3-week and 7-week exponentially smoothed average price lines (ESA lines) remained in bearish divergence and suggest further declines this week. The 3-week and 7-week ESA lines settled the week lower at 7,719 and 7,854 points respectively.