The global benchmark for CPO rebounded from a 3-month low on Thursday, supported by reports of firm exports for the first 25 days of May and improved performance in rival soyoil futures in Chicago. Market sentiment turned cheerful, after 3 straight sessions of declines, following the release of Malaysian palm shipments from closely watched ITS and SGS 1- 25 day export numbers.
For the period leading up to 25th May, cargo surveyors, ITS and SGS recorded a month-on-month increase in shipments by 16.2% and 12.9% respectively. In external markets, crude oil tumbled 5% on disappointing output cuts by OPEC and other producing nations of 1.8 million barrels per day until the end of 1Q18. Meanwhile, Chicago’s soyoil futures contract reversed earlier gains to trade 0.7% lower overnight, tracking a slump in crude oil prices. As such, expect palm to trade lower today on weakness emanating from lower crude oil prices, which may plague edible oil markets ahead of the weekend.
Futures for August delivery gained 24 points at the close of Thursday, as prices settled at MYR2,607. Successful settlement of prices above 2,600 would seem to indicate some strength in the tropical oil albeit a power struggle between the bulls and the bears around 2,600 levels. On the daily chart, prices formed a short bodied white candlestick with a short upper shadow and a longer bottom. A “Downside Tasuki Gap” had formed and is suggestive of a further downtrend in CPO prices. Taking cues from a plunge in crude oil markets, BMDs benchmark 3rd month contract is expected to open lower and trade on a weaker note with support and resistance is eyed at 2,560 and 2,620 respectively.
Get Experienced trader’s strategies and signals. Click here.