CPO futures mart hostage to oil prices
Business Times
Monday, June 30, 2008
OBSERVATIONS: The Kuala Lumpur CPO futures market went on another roller-coaster ride last week, plunging at first on external factors and then rallying smartly in late trade, also on external factors - mainly the surge of crude oil to a new high.
The actively-trade September 2008 contract was sold down an intra-week low of RM3,490 a tonne at first, and then bidded up above the RM3,600 level. The contract settled last Friday at RM3,623, up RM72 or 2.03 per cent over the week.
This market, on its way up the price chart, took no notice of the crop’s uninspiring fundamentals. Swiss export monitor Societe Generale de Surveillance (SGS) put June 1 -25 exports of palm oil at 923,345 tonnes, down 12.3 per cent compared with that for the corresponding period in May.
And if there were concerns that the poor export performance thus far this month would result in end-June 2008 stocks stacking up to a new high, it certainly was not evident.
Market players were encouraged by news that
But the principal factor which put this market - and most other world commodities too, for that matter - under a burner was crude oil’s surge last week to a record high above US$142 a barrel.
Conclusion: Although this market will remain hostage to crude oil in the immediate to short-term future the difference is that while crude oil is a bull, palm oil is not , if the technicals are any guide.
To be labelled a bull this market will have to stage a decisive break out above its short term RM3,170-RM3,730 trading band.
The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.
