CPO reaches six-week high

CRUDE PALM OIL

CRUDE palm oil (CPO) futures prices on Bursa Malaysia Derivatives expanded on its upward momentum and reached a six-week high lifted by short-covering and speculative buying and had their best end-week close on Friday.
Firmer soyoil prices and renewed concerns over tight supplies, after a slow growth in output in the second half of July, encouraged fresh buying interests.

The Malaysian Palm Oil Board (MPOB) said last week Malaysia's CPO output for June fell 2.9% to 1.166 million tonnes from a revised 1.201 million a month earlier.


MPOB estimated the end-June palm oil stocks were 7.48% higher at 1.200 million tonnes from 1.117 million a month ago. Exports were estimated sharply lower by 18.13% to 943,521 tonnes from 1.152 million tonnes in May.

The September futures prices rebounded from a week’s low of RM2,484 and closed Friday at RM2,623, up RM103 a tonne. Trades for the week ranged widely from RM2,632 to RM2,484.

Volume for the week rose to 66,263 from 43,622 contracts a week earlier. Open-interests at Thursday’s close were higher at 65,278 against 61,229 contracts previously.

The weekly candlestick chart settled Friday on a positive note and suggested the bullish momentum would sustain.

The weekly chart shows the September futures have an important chart resistance at the RM2,635–RM2,650 levels. The overall nearterm chart picture would turn bullish if this technical hurdle is vaulted this week. Chart support is seen higher at RM2,600–RM2,580.

The weekly oscillators ended the week positive and indicated the market would remain firm. The weekly stochastic closed with its buy signal intact and called for more upward trading.

The oscillators per cent K and D finished higher at 59.45% and 44.28% respectively. The 3- and 7-week ESA-lines remained in positive divergence and signalled the immediate-term trend was still bullish.

The 5-week RSI ended higher close to the overbought zones at 79.78 points and continued to show the market’s immediate underlying strength was constructive.

SOYOIL

SOYOIL futures on the Chicago Board of Trade trended higher on follow-through buying from last week’s low US soybean acreage estimate and concerns over hot weather in the Midwest that is stressing the crop.

The US Department of Agriculture's (USDA) 2007/08 ending stocks forecast released last Thursday showed ending soybean stocks at 245 million bushels, off 75 million bushels from its June forecast.

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


The weekly candlestick chart settled positive and showed the upward trend would continue this week.

The August futures prices have an immediate chart support at the 37.50–37.35 US cents levels.

The overall trend is likely to stay buoyant if these levels are not violated this week. Chart resistance for this week is adjusted higher to 38.25–38.45 US cents.

The weekly indicators closed bullish and indicated the main trend was still constructive.

The weekly stochastic closed with its buy signal intact and signalled the market was in an extended bullish phase. The oscillators per cent K and D settled sharply higher at 84.38% and 69.44% respectively.

The 3- and 7-week ESA-lines expanded on their bullish divergence last week and continued to show the main trend was bullish.

The 5-day RSI rebounded from its most recent low of 50.74 points and ended higher at 79.30.

The RSI is indicating the market is technically overbought.

COCOA

COCOA futures prices on the New York Board of Trade tumbled in early trading last week on long-liquidation as funds and speculative players unwound large buying positions.

An overbought technical setting and the lack of fresh bullish news following a 4 ½-year peak prompted many earlier bulls to cash out. The September cocoa futures trended down from a week's high of US$2,118 to US$2,018 and closed moderately lower at US$2,077, off US$46 a tonne from a week earlier.


The weekly candlestick chart ended the week negative and pointed to further sideways to lower trading.

Chart support for this week is lowered to the US$2,050–US$2,025 levels. Chart resistance is also seen lower at US$2,100–US$2,120.

The weekly indicators finished on a mixed note and indicated the market would remain in sideways range trading this week.

The daily stochastic closed with its sell signal intact and suggested the main trend of the market was still negative. The 3- and 7-week exponentially smoothed moving-average price lines ended in bullish divergence and signalled the immediate-term trend was neutral to slightly negative.

The 5-week Relative Strength Index closed lower at 60.64 points and showed the market’s immediate underlying strength was slightly positive.

Source: biz.thestar.com.my