Forecasting Price Trends: A weekly column by G.M. Teoh on Crude Palm Oil, Soyoil, Cocoa and Cash Tin.
CRUDE PALM OIL
CRUDE palm oil (CPO) futures prices on the Bursa Malaysia Derivatives surged during the three-day trading week and tested their eight-year highs following improved export figures for April and bullish comments from the palm oil conference in Jakarta.
Malaysia’s palm oil exports in April advanced with fresh demand from China and India. According to cargo surveyor Societe Generale de Surveillance, exports in April rose 13.3% to 1.131 million tonnes compared to 998,759 tonnes in March.
Adding to the bullish sentiment was market talk that India’s palm oil imports this year would surge by 42% to 4.7 million tonnes from 3.3 million tonnes last year.
The July futures prices ranged widely from RM2,203 to RM2,305 and closed near the top-end of its intra-week’s high at RM2,288, up RM83 per tonne from the previous week.
Total volume for the three-day trading week advanced to 42,166 contracts from 34,789 contracts the week before.
The weekly candlestick chart concluded the week on a bullish note and signalled that the market had the potential for further upward trading. The big white candle that formed last week following the upward breakout from its three-week-old resistance suggested that the underlying strength of the market was still bullish.
Immediate-term chart support now stands at the RM2,260-RM2,245 level. The overall trend would likely remain bullish if this support is not violated. Resistance for the immediate term is now seen at the RM2,320-RM2,3450 level.
The weekly oscillators closed the week neutral to slightly positive and suggested that the underlying strength of the immediate-term market would stay buoyant. The weekly stochastic retained the sell signal of April 13 and turned slightly positive on Friday’s close to show that the immediate-term momentum was still bullish.
Meanwhile, the 3- and 7-week exponentially smoothed moving average price lines (ESA lines) finished in positive divergence and indicated the main trend was still in a bullish phase.
The 9-week Relative Strength Index (RSI) continued to indicate that the underlying strength of the market was constructive and settled Friday higher in the overbought zone at 87.12 points.
THE soyoil futures traded on the Chicago Board of Trade (CBOT) finished the week moderately higher after having returned a large portion of its earlier advances. Weakness in corn and soybean prices after a strong rally triggered off long liquidation activities in soyoil.
Planting delays in corn and concerns that soybean acreage would increase helped keep a lid on soyoil advances. Bullish performances and the Malaysian CPO futures prices’ eight-year high provided the fuel for an early contract high on Thursday.
The weekly candlestick chart finished the week slightly negative and indicated that the immediate-term momentum has turned slightly bearish. Last week’s white candle and its long upper shadow showed that the market is faced with strong overhead resistance.
A minor chart support is seen at the 33.30-33.10 US cent level. More downward pressure is expected to develop if this level is breached this week.
Chart resistance for this week is revised higher to the 33.80-33.95 US cent level. A successful upward break from here would signal the continuation of the bullish rally.
The weekly indicators concluded the week mixed and called for further choppy trading with a slight downward bias this week. The weekly stochastic ended Thursday with its sell signal intact and pointed to the prospects of more downward adjustments this week.
The weekly ESA lines remained in positive divergence and signalled that the main trend was still constructive.
Meanwhile, the 9-week RSI ended higher at 79.55 points and indicated that the market was technically overbought.
COCOA futures prices on the New York Board of Trade advanced on a strong technical rebound last week as prices rallied for three straight days and took the market away from its most recent sell-off lows.
Trading remained dominated by funds and speculative elements. The strong technical bounce had given hope that the market would continue to be buoyant and recover all of its recent excessive losses.
The July cocoa futures prices ranged from US$1,757 to US$1,883 and settled the week higher at US$1,879, up US$57 per tonne from the previous week.
The weekly candlestick chart painted a bullish scenario last week. The big white candle following five straight weeks of downward trading suggests that the market is in an upward reversal.
Chart support for this week is pegged at the US$1,850-US$1,830 level. The recovery rally would sustain if this level is not violated this week. A minor chart resistance and upside objective is now seen at the US$1,885-US$1,920 level.
The weekly oscillators settled the week mostly positive and continued to show that the market’s immediate momentum was bullish.
The weekly stochastic retained its sell signal of March 30 and showed that the main cycle of the market was negative.
The 3- and 7-week ESA lines ended the week in bullish divergence and called for a minor upward move this week.
Meanwhile, the 9-week RSI edged higher and ended at the 61.70 points. Analysis of the RSI shows that the market’s immediate underlying strength is neutral to slightly positive.
TIN prices on the Kuala Lumpur Tin Market (KLTM) reversed direction last week and advanced on strong demand from Japanese buyers and impressive recovery in the London Metal Exchange tin prices.
Prices jumped during the three-day trading week with a moderate volume of 160 tonnes against 164 tonnes a week ago.
Trading range remained wide with prices ranging from US$13,710 to US$14,580 per tonne and finally closed Friday at US$14,580, up US$870 from previously.
The weekly candlestick chart ended the week bullish and called for more upward trading in the immediate term. Last week’s large white candle and penetration of its near five-week resistance suggest that the underlying strength of the market is bullish.
Chart support for this week is pushed higher to the US$14,250-US$14,200 level. Chart resistance for the coming session is adjusted higher to the US$14,750-US$14,850 level.
The weekly technical oscillators stayed positive on Friday’s close and signalled that the newly developed upward momentum would sustain.
The weekly stochastic triggered ended with its sell signal intact and failed to give the trend reversal signal on Friday’s close. The oscillators per cent K and D settled at 37.80% and 44.85% respectively.
The 3- and 7-week ESA lines ended in bullish divergence and indicated that the market was in a bullish phase. The 9-week RSI advanced to 68.00 points and showed that the immediate-term underlying strength of the market was positive.
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