The Star

Monday December 31, 2007

By G.M. Teoh

CRUDE PALM OIL

CRUDE palm oil futures price at the Bursa Malaysia Derivatives surged to a new high on short-covering activities last week fuelled by higher soyoil and strong advances in crude oil prices.

Slight supply squeeze in the physical crude palm oil market after the monsoon flooding helped boost sentiment. Crude oil at the NYMEX rose above the US$97 per barrel briefly and threatened to re-test it record high level.

Higher Malaysian palm oil exports during Dec 1 to 25 added fuel to the bullish sentiment. Societe Generale de Surveillance estimated exports higher by 1.1% to 1.12 million tonnes from 1.10 million tonnes in the same period in November.

The March futures price jumped from a weekly-low of RM3,000 and established a fresh historic high at RM3,150 on Thursday and settled the week sharply higher atRM3,121, up RM129 per tonne from a week ago.

Total volume during the four-day trading week advanced to 29,367 contracts from 22,843 contracts previously.

Overall open interest as at Thursday’s close dropped to 38,520 contracts from 41,071 contracts previously.

The weekly candlestick chart ended the week positive for the near-term trend. Three white candles occurred in the last three weeks and the steady upward pattern suggests that the main trend is still bullish.

Crude palm oil prices are at their best levels and with the market at a major peak, a significant correction may be on the way.

The March futures immediate term chart-support is now peg at the RM3,100-RM3,075 level. A downward break from this level could trigger off a strong wave of technical selling.

Chart resistance for this week stands at the RM3,150-RM3,175 level.

The technical indicators finished the week mixed and indicated that the market had reached a major top and is in an environment where prices could swing wildly.

The daily stochastic triggered the sell signal on Dec 27 and remained negative for the price chart.

The oscillators per cent K and D settled higher at 83.60% and 88.55% respectively.

The trend tracker 3- and 7-day ESA lines expanded on its bullish divergence and signalled that the main trend is still constructive.

The 5-day RSI finished higher in the oversold territory at 89.92 points and indicated that the immediate underlying strength of the market is still positive.

This entry was posted on Monday, December 31st, 2007 at 10:50 am and is filed under Crude Palm Oil Futures. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.