Forecasting Price Trends: A weekly column by G.M. Teoh on Crude Palm Oil, Soyoil, Cocoa and Cash Tin
CRUDE palm oil (CPO) futures prices on the Bursa Malaysia Derivatives trended sideways to lower throughout last week, pressureD by moderate long liquidation and finally ended Friday in the minus column.
Higher Malaysian palm oil exports for the first 10 days of October failed to provide much underlying support. Societe Generale de Serveillance (SGS) estimated exports sharply higher at 473,891 tonnes, up 20.7% from the same period in September.
Official Malaysian Palm Oil Board (MPOB) data for September received lukewarm reception from the market last week. MPOB said output of CPO in September rose by 4.82% to 1.433 million tonnes. Exports of palm oil rose by 2.16% to 1.149 million tonnes and stocks at the end of September was estimated to have increased by 7.61% to 1.436 million tonnes.
The December futures prices eased from the week's high of RM1,472 to RM1,441 and closed the week moderately lower at RM1,453, off RM13 per tonne from previously.
Total volume for the week dropped slightly to 26,677 tonnes from 26,780 contracts previously. Open interest as at Thursday’s close increased marginally to 28,285 contracts from 27,999 contracts a week ago.
The daily candlestick chart closed the week slightly negative and suggested that the market would retain its sideways to lower fluctuation this week.
Chart support for the December futures prices is adjusted lower to the RM1,440-RM1,430 level. The immediate-term chart picture would remain negative if this level is breached. Chart resistance for this week remains at the RM1,4760-RM1,480 level.
The daily technical indicators ended on a negative tone and indicated that the immediate-term direction of the market is bearish.
The daily stochastic continues to show that the short-term trend is bearish. The oscillators per cent K and D settled the week sharply lower at 18.62% and 18.88% respectively.
The daily MACD ended the week bearish and pointed to more downward action this week. The MACD and the trigger line finished the week lower in the positive territory at 14.62 points and 16.02 points respectively.
The exponentially smoothed moving-average price lines (ESA lines) gave the short-term sell signal on Oct 11 and stayed negative on Friday’s close. The 3-day and 7-day ESA lines ended the week lower at 1,454 points and 1,457 points respectively. Analysis of the ESA lines shows that a downward cycle had started.
The 9-day Relative Strength Index (RSI) declined from the week's high of 62.16 points on Oct 10 and settled lower near the neutral territory at 52.52 points. Analysis of the daily RSI indicates that the immediate underlying strength of the market is weak.
SOYOIL futures prices on the Chicago Board of Trade (CBOT) plunged in early trading on fund long liquidation in anticipation of a large US soybean crop and rebounded strongly for the rest of last week as traders rushed to cover short positions on a smaller-than-expected estimates of the US soybean crop.
Last week the United States Department of Agriculture (USDA) estimated the 2005 US soybean crop at 2.967 billion bushels, below the average trade estimate of 3.014 billion.
The December soyoil futures prices ranged from the week's high of 24.52 US cents to 23.05 US cents and closed Thursday slightly higher at 23.89 US cents, up 0.23 US cent per pound from previously.
The daily candlestick chart closed the week bullish and signalled that the upward momentum that started last week would be sustained.
Chart support for this week is seen at the 23.70-23.55 US cents level. The underlying momentum of the market would fizzle out if this level is violated this week. Chart resistance for this week stands at the 24.00-24.15 US cents level.
The daily technical indicators ended the week mostly positive and called for the continuation of the upward cycle.
The daily stochastic triggered the buy signal on Oct 12 and closed the week on a positive setting. The oscillators per cent K and D closed the week sharply lower at 56.53% and 38.76% respectively.
The 3-day and 7-day ESA lines triggered the buy signal on Oct 12 and remained bullish on Thursday’s close. The 3-day and 7-day ESA lines ended lower at 23.88 points and 23.80 points respectively.
The daily MACD shows that the upward cycle is intact. The MACD and trigger line closed the week lower in the positive zones at 0.264 point and 0.23 point respectively.
The 9-day RSI rebounded from the week's low 47.67 points on Oct 10 and closed the week slightly lower at 55.20 points. Analysis of the RSI indicates that the immediate underlying strength of the market is constructive.
COCOA futures prices on the New York Board of Trade (NYBOT) ended the week slightly lower, depressed by speculators' long liquidation in a very tight band trading week.
Traders blamed the slow trading conditions to producers getting ready to hedge the fresh West African crop. The Ivory Coast marketing begins from October to March next year.
The December cocoa futures prices ranged narrowly from the week's high of US$1,373 to US$1,347 per tonne and ended Thursday slightly lower at US$1,352, off US$15 per tonne from a week ago.
The daily candlestick chart finished the week neutral-to-slightly negative and signalled that the market was in a sideways congestion phase.
An immediate chart support for this week is seen at the US$1,340-US$1,330 level. Breaching of these supports would mark the resumption of the downward cycle. Chart resistance for this week is adjusted lower to the US$1,370-US$1,385 level.
The daily oscillators closed the week mixed and suggested further sideways to lower fluctuation this week.
The daily stochastic triggered the short-term buy signal on Oct 12 and indicated that the market was slightly technically oversold at current levels. The daily oscillators per cent K and D settled the week lower at 17.15% and 10.30% respectively.
The 3-day and 7-day ESA lines retained the sell signal and indicated a slight positive convergence on Thursday’s close. The 3-day and 7-day ESA lines closed lower at 1,362 and 1,366 points respectively.
The daily MACD turned negative last week and settled Friday with a mild positive convergence to indicate that a mild upward correction would take place this week. The MACD and trigger line settled the week lower at minus 15.67 and minus 15.58 points respectively.
The 9-day RSI recovered from the week's low of 36.47 points on Oct 12 and closed the week slightly lower in the negative zones at 45.61 points. Analysis of the daily RSI indicates that the immediate underlying strength of the market is neutral to slightly positive.
TIN prices on the Kuala Lumpur Tin Market (KLTM) rebounded mildly in early trading last week but the move was shortlived as renewed selling pressure pushed prices to close the week at its intra-week’s low.
Tin prices at the KLTM eased from the week's high of US$6,620 to US$6,500 and settled the week at the lower at US$6,500 per tonne, down US$40 from previously.
Total volume for the week declined sharply to 171 tonnes from 264 tonnes a week ago.
The candlestick chart ended the week negative and signalled the main trend would stay bearish for the near term.
Chart support for this week is adjusted lower to the US$6,450-US$6,400 level. Chart resistance for this week remains unchanged at the US$6,550-US$6,600 level.
The weekly oscillators closed the week mostly bearish and points to more downward pressure in the near term.
The weekly stochastic closed the week bearish. The oscillators per cent K and D closed lower at 21.405% and 22.61% respectively. Analysis of the weekly stochastic showed that the immediate trend of the market is negative.
The weekly MACD remains bearish for the near-term trend. The MACD and trigger line settled the week at -0.34 point and -0.33 point respectively.
The 3-week and 7-week ESA lines expanded on its bearish divergence last week and signalled that the near-term trend would stay bearish. The 3-week and 7-week ESA lines finished the week lower at 6,564 and 6,697 points respectively.
The 9-week RSI declined further into the oversold territory at 21.39 points. Analysis of the weekly RSI shows that the market’s immediate underlying strength is bearish.