Malaysian palm oil futures on Bursa Malaysia Derivatives exchange ended higher on Thursday on encouraging export data that showed firm demand and some short-covering ahead of a holiday weekend. Cargo surveyor ITS reported on Thursday an 11 per cent jump in Malaysia’s October 1-25 palm exports from a month ago. Another cargo surveyor, Societe Generale de Surveillance, reported a nine per cent improvement for the same period. There was a let down by the US Federal Reserve as there was no announcement of further stimulus that could boost global economic growth and commodity demand, led to a sell-off across the commodity complex. In related markets, soya complex faced pressure from expectations that Brazil and Argentina, the biggest producers after the US, will harvest record crops next spring.

CPO active month futures pushed further higher against our expectation. Prices have been gradually inching higher, but still the overall bearish bias still persists. Price structures warn of a decline towards Malaysian ringgit (MYR) 2,395-400 a tonne levels initially or even lower to MYR2,210 in the coming sessions. Decline below MYR2,520 could open the downside once again. As we focus on near-term bearishness, in the medium to long-term, there is a good possibility of a return near MYR3,000 or even higher. Immediately, while MYR2,625-35 caps upside attempts, a decline lower to above mentioned levels look likely. Unexpected rise above MYR2,695 could hint that the bearishness has abated. Presently, the wave counts remain mixed with no clarity at all on long-time direction. As mentioned in the earlier update, we will give up the expectation of an impulse still in progress on a daily close below MYR2,675 and such a fall could target MYR2,400 at least. A possible wave “C” is now in progress with potential targets in the MYR2,350-75 range which has been broken and looks like it could extend to MYR2,100 also. Ideally, a new impulse could begin from lows near MYR2,050-2,100 levels. RSI is in the neutral zone indicating it is neither overbought nor oversold. The averages in MACD are below the zero line of the indicator hinting at bearishness to be intact. Therefore, look for palm oil futures to decline once again. Supports are at MYR2,555, MYR2,520 and MYR2,400. Resistances are at MYR 2,625, MYR2,660 and MYR2,705.

(The author is the Director of Commtrendz Research and also in the advisory panel of Multi Commodity Exchange of India Ltd. The views expressed in this column are his own and not that of MCX. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.)

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