Crude palm oil prices tumbled on profit-taking by bulls last week
The Star
Monday - April 28, 2008
CRUDE PALM OIL
Crude palm oil (CPO) futures on Bursa Malaysia Derivatives ended a roller-coaster sort of week sharply lower, pressured by long-liquidation selling.
Various factors contributed to the choppy trading conditions last week.
They included sharp losses in the Chicago Board of Trade (CBOT) soyoil prices, record high crude oil price, expectations that
The higher palm oil exports for the first 25 days of April had little positive impact on trading. Societe Generale de Surveillance (SGS) estimated that exports of Malaysia’s palm oil for April 1–25 were 3% higher at 1.068 million tonnes from 1.037 million tonnes a month earlier.
The July futures prices advanced from a week’s low of RM3,385 and hit a high of RM3,560 on Wednesday. It then fell on long liquidation and speculative selling pressure to end Friday sharply lower at RM3,419, down RM196 per tonne from the week before.
Volume for the week declined sharply to 50,320 from 57,316 contracts. Open interests at Thursday’s close improved to 38,288 from 37,820 contracts a week earlier. The open interest or the size of the entire market is at its lowest since mid-May 2006.
The daily candlestick chart remained bearish for the immediate-term trend. A falling window occurred last Friday. The bottom of the previous shadow is above the top of Friday’s black candle. This sort of chart pattern usually implies a continuation of a bearish cycle.
Trading will likely be range-bound with a downward bias in the coming shortened four-day trading week.
The July futures’ immediate chart support for this week is pegged at the RM3,360–RM3,330 levels. The immediate-term chart outlook would turn very bearish if these levels are violated.
Chart resistance for the immediate term stands at RM3,445–RM3,480.
The daily technical indicators concluded the week on a negative note and indicated the downward pressure that emerged in late trading last week would continue.
The daily stochastic triggered the buy signal on April 24 and managed to stay constructive for the price chart at Friday’s close. The oscillators per cent K and D closed sharply lower at 35.86% and 31.39% respectively.
The short-term trend-trackers, the 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines), triggered the sell signal on April 21 and ended the week in bearish divergence. They showed the bearish cycle would expand.
The 5-day Relative Strength Index (RSI) settled the week lower at 36.49 points and indicated the market’s immediate underlying strength was now bearish.
