CPO closes with strong gains Prices expected to remain buoyant this week

CRUDE PALM OIL

CRUDE palm oil (CPO) futures prices on Bursa Malaysia Derivatives advanced to a four-week high in early trading, boosted by the bullish soyoil prices and fresh buying. Expectation of strong overseas demand for Ramadan initially inspired the speculative elements and prices then eased on profit-taking, followed by a late rally to close the week with sharp gains. 

News that Indonesia raised base export prices for palm oil products had some bullish impact on trading. The base export price for CPO was raised to US$676 a tonne from US$622 a tonne, and RBD palm olein increased to US$746 a tonne from US$676 earlier.

Cargo surveyor Societe Generale de Surveillance’s estimate that exports of Malaysian palm oil products in June were lower by 15% at 1,007,424 tonnes failed to generate any strong selling pressure. 

The September futures prices closed RM93 per tonne higher at RM2,520. Trades for the week fluctuated from a low of RM2,522 to RM2,444. 

Total volume for the week dipped slightly to 43,622 contracts from 45,831 contracts the week before. Open interest as at Thursday’s close declined to 61,229 contracts from 76,191 contracts the previous week. 

The weekly candlestick chart ended the week positive and suggested further sideways to higher trading this week. 

Based on the weekly chart, the September futures chart-resistance now stands at the RM2,535-RM2,550 level. Chart support for this week is revised higher to the RM2,480-RM2,460 level. The immediate-term trend would turn bearish if this support is breached this week. 

The weekly oscillators settled the week constructive and signalled that the market would remain buoyant. The daily stochastic ended with its buy signal intact and suggested that the immediate-term trend was still constructive. The oscillators per cent K and D ended lower at 39.69% and 36.78% respectively.

Meanwhile, the 3- and 7-week exponentially smoothed moving average price lines (ESA lines) closed in bullish divergence and continue to show that the immediate-term trend is positive. 

The 5-week Relative Strength Index (RSI) closed higher at 71.00 points and signalled that the market’s immediate underlying strength is still positive. 

SOYOIL 

SOYOIL futures at the Chicago Board of Trade surged to fresh historic highs following the release of a bullish soybean planting figure from the US Department of Agriculture (USDA) and then returned a large portion of the earlier advances and closed down from their weekly best, dampened by a strong wave of long liquidation pressure.

The USDA’s June planting report pegged US 2007 soybean planting acreage at 64.081 million acres, sharply below analysts’ forecast of 68.0 million acres and well below the USDA forecast in March of 67.140 million acres.

Weather conditions will play an important role in the market direction from now on. Weather in late July and August will set the course for the soybean complex market for the remaining part of this year. 

The latest weekly crop progress report showed that growing conditions were improving with a two-point improvement over the week before. USDA estimated that 68% of the US soybeans were in good to excellent condition. 

The September futures prices jumped from an intra-week low of 36.50 US cents to 37.25 US cents and settled unchanged at 36.91 US cents per pound. 

The weekly candlestick chart ended the week neutral to slightly positive and indicated that the market was in an upward cycle.

The September futures have an immediate chart support at the 36.60-36.50 US cent level. The bullish momentum of the market is likely to continue if this support is not violated this week. Chart resistance for this week is seen higher at the 37.35-37.50 US cent level. 

The weekly indicators closed the week mostly positive and suggested that the market’s newly developed upward strength would sustain. 

The weekly stochastic expanded on its buy signal last week and continued to remain bullish for the immediate-term trend. The oscillators per cent K and D closed lower at 60.17% and 59.46% respectively.

The 3- and 7-day ESA lines ended in bullish divergence and signalled that the main trend was still constructive. 

Meanwhile, the 5-day RSI edged higher and closed at 73.05 points and showed that the market’s immediate-term underlying strength was positive.

COCOA 

COCOA futures prices on the New York Board of Trade failed to garner fresh speculative buying support in early trading to re-test its 4¼-year high and dipped on profit-taking activities before rebounding strongly to close on Thursday with minor gains. 

There were no strong convictions from bulls in the early sessions and the market simply drifted lower on liquidation pressure. The strength from the “war premium” rally, following a rocket attack on the plane of the new prime minister in Ivory Coast earlier, simply fizzled.

Capping the advances were the regular persistent rainfall in Ivory Coast’s main growing area over the last couple of months. Production is expected to improve with the rains continuing. 

The September cocoa futures prices rose from the week’s low of US$2,040 to US$2,129 and ended the week moderately higher at US$2,116, up US$54 per tonne from previously. 

The weekly candlestick chart closed the week bullish. There were three white candles in the last three weeks. This steady upward trend suggests that the underlying strength of the market would continue. 

Chart support for this week is adjusted higher to the US$2,090-US$2,075 level. Chart resistance now stands at the US$2,145-US$2,150 level. 

The weekly indicators ended the week on a bullish setting and called for more upside trading this week. 

The daily stochastic retained its buy signal on Thursday’s close and indicated that the market was in an extended move. 

The 3- and 7-week ESA lines closed in bullish divergence and pointed to further upward trading. 

Meanwhile, the 5-week RSI ended fractionally lower at 74.02 points and indicated that the market’s immediate underlying strength was neutral-to-slightly positive. 

Sumber: biz.thestar.com