Malaysian palm oil futures on BMD ended lower Friday, as weakness in competing soy complex stoked worries of a shift in demand from Palm oil. Data from cargo surveyors showed that Malaysian palm oil exports fell by as much as 26 percent for the Dec. 1-10 period compared to a month ago, as buyers remained on the sidelines due to high prices. Market participants will be watching for export data for the first half of December, to be released by cargo surveyors on Monday, for more trading cues. Softer demand for palm oil, typical towards the year-end as palm solidifies in winter, have pressured palm prices to some extent.

CPO active month futures moved lower breaking key supports. As cautioned in the previous update, direct fall below 2600 MYR/ton could hint a failure to rally higher and a stronger corrective decline can be seen towards 2525-30 MYR/ton range being a fibonnaci retracement point. Stronger support is seen at 2475-80 MYR/ton levels being a strong confluence support point. We believe this level could hold any attempts to dip further and the upward move to resume from there again. Resistance will now be seen at 2595-2610 MYR/ton levels. Only a direct rise above 2654 MYR/ton could hint that the corrective decline has ended prematurely and further upside to 2800-25 MYR/ton levels. However, current price structures do not indicate such a move in the coming weeks.

As mentioned earlier prices met an intermediate wave target at 2135 MYR/ton and corrective decline to 2345-50 MYR/ton levels, followed by a sharp third wave move to 2575-2600 MYR/ton materialised. The potential third wave targets are near 2750-2800 MYR/ton levels now. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. It is also showing a negative divergence hinting at a bigger corrective fall in the coming weeks. The averages in MACD are still above the zero line of the indicator hinting at a bullish to be intact. Only a crossover below the zero line again could again hint at weakness again.

Therefore, look for palm oil futures to test the supports and rise higher again.

Supports are at MYR, 2545, 2520, 2475 Resistances are at MYR 2595, 2620 & 2655.

(The author is the Director of Commtrendz Research and also in the advisory panel of Multi Commodity Exchange of India Ltd (MCX). 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.t@gmail.com .)

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