by G. M. Teoh

Monday - Prices ended higher on hedge buying and short-covering last week

CRUDE PALM OIL

Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives dipped in early trading in sympathy with sharply lower soyoil prices and then rebounded on India’s import duty reduction to close the week with big gains.

India initially cut the import duty on CPO to 40% from 50% and later adjusted it higher to 45%. Import duty on refined palm olein was also cut from 57.5% to 52.5%.

Bullish factors aiding the market last week were the sharply higher US crude oil that advanced above US$77 per barrel and the weaker ringgit against the US dollar.

Supporting the bullish sentiment was the cargo surveyor Societe Generale de Surveillance’s (SGS) estimates of Malaysia’s palm oil exports for the first 25 days of July. SGS said exports were higher by 12.1% to 936,720 tonnes compared with the same period a month earlier.

The October futures prices rose from a week’s low of RM2,459 and made a high of RM2,583 on Friday before closing the week sharply higher at RM2,583, up RM77 a tonne from the week before.

Volume for the week eased slightly to 42,458 from 52,302 contracts a week earlier. Open interests at Thursday’s close improved to 65,627 from 62,123 contracts previously.

The daily candlestick chart finished the week on a bullish note and called for the resumption of the positive momentum this week. There were three white candles the past three days. The gradual upward pattern suggests the upward trend would continue.

The daily chart shows the October futures have an important chart resistance at the RM2,600–RM2,620 levels. An upward breakout from this two-week high and chart resistance would drive the market on a bullish course. Chart support for this week is revised lower to the RM2,565–RM2,550 levels.

The overall trend is likely to stay constructive if the market can hold above these supports levels.

The daily oscillators ended the week mostly positive and signalled the prospects for more upside trading this week. The daily stochastic ended bullish at Friday’s close and indicated the upward cycle was intact. The oscillators per cent K and D finished higher at 88.58% and 75.61% respectively.

The 3- and 7-week exponentially smoothed moving-average price lines (ESA-lines) settled in positive divergence and indicated the main trend was still in a bullish course.

The 5-day Relative Strength Index (RSI) rebounded and closed sharply higher at 68.79 points. Analysis of the RSI indicates the market’s immediate underlying strength is bullish.

This entry was posted on Monday, July 30th, 2007 at 11:33 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.