Crude palm oil surged on record oil and soaring soyoil prices last week
The Star
Monday June 30, 2008
CRUDE PALM OIL
CRUDE palm oil (CPO) futures on Bursa Malaysia Derivatives fell to a 3½-month low in an early round of weakness last week, spurred by losses in the Chicago Board of Trade soyoil futures and a downward correction in crude oil prices.
The downward move was altered in mid-week by a strong wave of short-covering and speculative buying following news of Indonesia raising its export tax for palm oil from 15% to 20% effective July.
The sharply higher soyoil price on Thursday and record crude oil prices above US$142 a barrel on Friday helped push the market to a seven-week high.
Lower exports in the first 25 days of June had limited impact on trading. According to Societe Generale de Surveillance (SGS),
The September futures prices rebounded from a week’s low of RM3,490 to a seven-week high of RM3,623 and settled sharply higher at RM3,623, up RM72 a tonne from a week earlier.
Volume for the week fell to 40,232 from 56,491 contracts. Open interest at Thursday’s close improved to 45,150 from 43,939 contracts the week before.
The daily candlestick chart finished the week in a bullish setting and indicated the upward rally would sustain. The formation of a large white candle on Friday and the upward breakout from the RM3,550–RM3,570 immediate resistance levels signalled the start of an upward wave.
Chart resistance for the immediate term is now seen at RM3,650–RM3,675. A successful upward breakout from this minor technical hurdle would take values higher to re-test the strong overhead resistance above the RM3,700 level.
Chart support for the immediate term now stands at the RM3,590–RM3,575 levels. Violation of these support levels would mark an end to the newly developed upward momentum. All the daily technical indicators remained positive at Friday’s close and signalled the market was in an upward correction.
The daily stochastic triggered the buy signal on June 24 and continued to indicate the upward move would expand.
The oscillators per cent K and D ended sharply higher at 60.10% and 32.79% respectively.
The immediate-term trend-tracker, the 3- and 7-day exponentially smoothed moving-average price lines (ESA-lines), triggered the buy signal on Friday and closed in bullish divergence.
The 5-day Relative Strength Index (RSI) rebounded from the negative territory at 27.32 points on June 24 and showed the market’s immediate underlying strength was strong.
